Correlation Between Catalyst Pharmaceuticals and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and Dow Jones 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 Pharmaceuticals and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Dow Jones Industrial, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Dow Jones 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 Pharmaceuticals with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Dow Jones.
Diversification Opportunities for Catalyst Pharmaceuticals and Dow Jones
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Catalyst and Dow is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Catalyst Pharmaceuticals 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 Pharmaceuticals are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Dow Jones go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and Dow Jones
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 3.93 times more return on investment than Dow Jones. However, Catalyst Pharmaceuticals is 3.93 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.07 per unit of risk. If you would invest 1,549 in Catalyst Pharmaceuticals on October 22, 2024 and sell it today you would earn a total of 729.00 from holding Catalyst Pharmaceuticals or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. Dow Jones Industrial
Performance |
| Timeline |
Catalyst Pharmaceuticals and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Catalyst Pharmaceuticals
Pair trading matchups for Catalyst Pharmaceuticals
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Catalyst Pharmaceuticals and Dow Jones
The main advantage of trading using opposite Catalyst Pharmaceuticals and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
| Dow Jones vs. Nasdaq Inc | Dow Jones vs. Summit Materials | Dow Jones vs. Vulcan Materials | Dow Jones vs. Celsius Holdings |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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