Correlation Between Catalyst Dynamic and Catalyst Insider
Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Catalyst Insider 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 Insider 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 Insider Income, you can compare the effects of market volatilities on Catalyst Dynamic and Catalyst Insider 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 Insider. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalyst Insider.
Diversification Opportunities for Catalyst Dynamic and Catalyst Insider
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalyst and Catalyst is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Catalyst Insider Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider 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 Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Income has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Catalyst Insider go up and down completely randomly.
Pair Corralation between Catalyst Dynamic and Catalyst Insider
Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 8.76 times more return on investment than Catalyst Insider. However, Catalyst Dynamic is 8.76 times more volatile than Catalyst Insider Income. It trades about 0.33 of its potential returns per unit of risk. Catalyst Insider Income is currently generating about 0.43 per unit of risk. If you would invest 2,124 in Catalyst Dynamic Alpha on September 3, 2024 and sell it today you would earn a total of 142.00 from holding Catalyst Dynamic Alpha or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Dynamic Alpha vs. Catalyst Insider Income
Performance |
| Timeline |
| Catalyst Dynamic Alpha |
| Catalyst Insider Income |
Catalyst Dynamic and Catalyst Insider Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Dynamic and Catalyst Insider
The main advantage of trading using opposite Catalyst Dynamic and Catalyst Insider positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Catalyst Insider 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 Insider will offset losses from the drop in Catalyst Insider's long position.| Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Nasdaq 100 Fund Class | Catalyst Dynamic vs. Select Fund C | Catalyst Dynamic vs. Nasdaq 100 Fund Class |
| Catalyst Insider vs. Catalyst Enhanced Income | Catalyst Insider vs. Catalystmillburn Hedge Strategy | Catalyst Insider vs. Rational Special Situations | Catalyst Insider vs. Catalystprinceton Floating Rate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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