Correlation Between Catalyst Dynamic and Catalyst/millburn
Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Catalyst/millburn 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/millburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Catalyst Dynamic and Catalyst/millburn 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/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalyst/millburn.
Diversification Opportunities for Catalyst Dynamic and Catalyst/millburn
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Catalyst and Catalyst/millburn is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Catalyst/millburn go up and down completely randomly.
Pair Corralation between Catalyst Dynamic and Catalyst/millburn
Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to under-perform the Catalyst/millburn. In addition to that, Catalyst Dynamic is 2.6 times more volatile than Catalystmillburn Hedge Strategy. It trades about -0.36 of its total potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about -0.33 per unit of volatility. If you would invest 3,980 in Catalystmillburn Hedge Strategy on December 1, 2024 and sell it today you would lose (104.00) from holding Catalystmillburn Hedge Strategy or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Dynamic Alpha vs. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Catalyst Dynamic Alpha |
| Catalystmillburn Hedge |
Catalyst Dynamic and Catalyst/millburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Dynamic and Catalyst/millburn
The main advantage of trading using opposite Catalyst Dynamic and Catalyst/millburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Catalyst/millburn 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/millburn will offset losses from the drop in Catalyst/millburn'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/millburn vs. Small Pany Growth | Catalyst/millburn vs. T Rowe Price | Catalyst/millburn vs. Jpmorgan Large Cap | Catalyst/millburn vs. The Hartford International |
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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