Correlation Between Catalyst Media and Trellus Health
Can any of the company-specific risk be diversified away by investing in both Catalyst Media and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on Catalyst Media and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Trellus Health.
Diversification Opportunities for Catalyst Media and Trellus Health
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Catalyst and Trellus is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health plc 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Catalyst Media i.e., Catalyst Media and Trellus Health go up and down completely randomly.
Pair Corralation between Catalyst Media and Trellus Health
Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 1.5 times more return on investment than Trellus Health. However, Catalyst Media is 1.5 times more volatile than Trellus Health plc. It trades about -0.12 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.18 per unit of risk. If you would invest 9,750 in Catalyst Media Group on August 31, 2024 and sell it today you would lose (750.00) from holding Catalyst Media Group or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Media Group vs. Trellus Health plc
Performance |
| Timeline |
| Catalyst Media Group |
| Trellus Health plc |
Catalyst Media and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Media and Trellus Health
The main advantage of trading using opposite Catalyst Media and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Media position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| Catalyst Media vs. Aurora Investment Trust | Catalyst Media vs. Panther Metals PLC | Catalyst Media vs. Taylor Maritime Investments | Catalyst Media vs. JB Hunt Transport |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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