Correlation Between Catalyst Dynamic and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Catalyst Enhanced 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 Dynamic and Catalyst Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Dynamic Alpha and Catalyst Enhanced Income, you can compare the effects of market volatilities on Catalyst Dynamic and Catalyst Enhanced 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 Dynamic with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalyst Enhanced.
Diversification Opportunities for Catalyst Dynamic and Catalyst Enhanced
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catalyst and Catalyst is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Catalyst Enhanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Enhanced Income and Catalyst Dynamic 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 Dynamic Alpha are associated (or correlated) with Catalyst Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Enhanced Income has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between Catalyst Dynamic and Catalyst Enhanced
Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 4.75 times more return on investment than Catalyst Enhanced. However, Catalyst Dynamic is 4.75 times more volatile than Catalyst Enhanced Income. It trades about 0.06 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.01 per unit of risk. If you would invest 1,938 in Catalyst Dynamic Alpha on August 25, 2024 and sell it today you would earn a total of 641.00 from holding Catalyst Dynamic Alpha or generate 33.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Dynamic Alpha vs. Catalyst Enhanced Income
Performance |
| Timeline |
| Catalyst Dynamic Alpha |
| Catalyst Enhanced Income |
Catalyst Dynamic and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Dynamic and Catalyst Enhanced
The main advantage of trading using opposite Catalyst Dynamic and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Catalyst Enhanced 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 Catalyst Enhanced will offset losses from the drop in Catalyst Enhanced's long position.| Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Nasdaq 100 Fund Class | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Nasdaq 100 Fund Class |
| Catalyst Enhanced vs. Guggenheim Risk Managed | Catalyst Enhanced vs. Real Estate Fund | Catalyst Enhanced vs. Commonwealth Real Estate | Catalyst Enhanced vs. Dunham Real Estate |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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