Correlation Between Catalyst Dynamic and Catalystmillburn
Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Catalystmillburn 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 Catalystmillburn 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 Catalystmillburn 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 Catalystmillburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalystmillburn.
Diversification Opportunities for Catalyst Dynamic and Catalystmillburn
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Catalyst and Catalystmillburn is 0.92. 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 Catalystmillburn. 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 Catalystmillburn go up and down completely randomly.
Pair Corralation between Catalyst Dynamic and Catalystmillburn
Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 1.7 times more return on investment than Catalystmillburn. However, Catalyst Dynamic is 1.7 times more volatile than Catalystmillburn Hedge Strategy. It trades about 0.34 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.29 per unit of risk. If you would invest 2,481 in Catalyst Dynamic Alpha on September 1, 2024 and sell it today you would earn a total of 179.00 from holding Catalyst Dynamic Alpha or generate 7.21% 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. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Catalyst Dynamic Alpha |
| Catalystmillburn Hedge |
Catalyst Dynamic and Catalystmillburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Dynamic and Catalystmillburn
The main advantage of trading using opposite Catalyst Dynamic and Catalystmillburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Catalystmillburn 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 Catalystmillburn will offset losses from the drop in Catalystmillburn'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 |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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