Correlation Between Catalyst Media and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Spirent Communications at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Catalyst Media and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Media Group and Spirent Communications plc, you can compare the effects of market volatilities on Catalyst Media and Spirent Communications and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Catalyst Media with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Spirent Communications.
Diversification Opportunities for Catalyst Media and Spirent Communications
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catalyst and Spirent is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and Catalyst Media is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Catalyst Media Group are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Catalyst Media i.e., Catalyst Media and Spirent Communications go up and down completely randomly.
Pair Corralation between Catalyst Media and Spirent Communications
Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 1.89 times more return on investment than Spirent Communications. However, Catalyst Media is 1.89 times more volatile than Spirent Communications plc. It trades about 0.06 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.07 per unit of risk. If you would invest 6,500 in Catalyst Media Group on October 12, 2024 and sell it today you would earn a total of 1,000.00 from holding Catalyst Media Group or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. Spirent Communications plc
Performance |
| Timeline |
| Catalyst Media Group |
| Spirent Communications |
Catalyst Media and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Spirent Communications
The main advantage of trading using opposite Catalyst Media and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, Spirent Communications can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Catalyst Media vs. Polar Capital Technology | Catalyst Media vs. DXC Technology Co | Catalyst Media vs. Zoom Video Communications | Catalyst Media vs. Cizzle Biotechnology Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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