Correlation Between Catalyst Dynamic and Catalyst/smh High
Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Catalyst/smh High 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/smh High 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 Catalystsmh High Income, you can compare the effects of market volatilities on Catalyst Dynamic and Catalyst/smh High 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/smh High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalyst/smh High.
Diversification Opportunities for Catalyst Dynamic and Catalyst/smh High
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Catalyst and Catalyst/smh is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Catalystsmh High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystsmh High 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/smh High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystsmh High Income has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Catalyst/smh High go up and down completely randomly.
Pair Corralation between Catalyst Dynamic and Catalyst/smh High
Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 3.01 times more return on investment than Catalyst/smh High. However, Catalyst Dynamic is 3.01 times more volatile than Catalystsmh High Income. It trades about 0.09 of its potential returns per unit of risk. Catalystsmh High Income is currently generating about 0.17 per unit of risk. If you would invest 1,954 in Catalyst Dynamic Alpha on September 1, 2024 and sell it today you would earn a total of 706.00 from holding Catalyst Dynamic Alpha or generate 36.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Dynamic Alpha vs. Catalystsmh High Income
Performance |
| Timeline |
| Catalyst Dynamic Alpha |
| Catalystsmh High Income |
Catalyst Dynamic and Catalyst/smh High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Dynamic and Catalyst/smh High
The main advantage of trading using opposite Catalyst Dynamic and Catalyst/smh High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Catalyst/smh High 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/smh High will offset losses from the drop in Catalyst/smh High's long position.| Catalyst Dynamic vs. Catalystmillburn Hedge Strategy | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Catalyst Mlp Infrastructure |
| Catalyst/smh High vs. High Yield Bond | Catalyst/smh High vs. Artisan High Income | Catalyst/smh High vs. Pacific Funds High | Catalyst/smh High vs. Victory High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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