Correlation Between Alphabet and Catena AB
Can any of the company-specific risk be diversified away by investing in both Alphabet and Catena AB 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 Alphabet and Catena AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Catena AB, you can compare the effects of market volatilities on Alphabet and Catena AB 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 Alphabet with a short position of Catena AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Catena AB.
Diversification Opportunities for Alphabet and Catena AB
Excellent diversification
The 3 months correlation between Alphabet and Catena is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Catena AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena AB and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Catena AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena AB has no effect on the direction of Alphabet i.e., Alphabet and Catena AB go up and down completely randomly.
Pair Corralation between Alphabet and Catena AB
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Catena AB. In addition to that, Alphabet is 1.32 times more volatile than Catena AB. It trades about -0.02 of its total potential returns per unit of risk. Catena AB is currently generating about 0.02 per unit of volatility. If you would invest 48,700 in Catena AB on September 1, 2024 and sell it today you would earn a total of 200.00 from holding Catena AB or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Catena AB
Performance |
| Timeline |
| Alphabet Class C |
| Catena AB |
Alphabet and Catena AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Catena AB
The main advantage of trading using opposite Alphabet and Catena AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Catena AB 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 Catena AB will offset losses from the drop in Catena AB's long position.The idea behind Alphabet Inc Class C and Catena AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Catena AB vs. Fastighets AB Balder | Catena AB vs. Fabege AB | Catena AB vs. Wihlborgs Fastigheter AB | Catena AB vs. AB Sagax |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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