Correlation Between Hasbro and Catalyst Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Hasbro and Catalyst Pharmaceuticals 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 Hasbro and Catalyst Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Hasbro and Catalyst Pharmaceuticals 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 Hasbro with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Catalyst Pharmaceuticals.
Diversification Opportunities for Hasbro and Catalyst Pharmaceuticals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hasbro and Catalyst is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Hasbro 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 Hasbro Inc are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Hasbro i.e., Hasbro and Catalyst Pharmaceuticals go up and down completely randomly.
Pair Corralation between Hasbro and Catalyst Pharmaceuticals
Considering the 90-day investment horizon Hasbro is expected to generate 2.76 times less return on investment than Catalyst Pharmaceuticals. But when comparing it to its historical volatility, Hasbro Inc is 1.51 times less risky than Catalyst Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Catalyst Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Catalyst Pharmaceuticals or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Catalyst Pharmaceuticals
Performance |
| Timeline |
| Hasbro Inc |
| Catalyst Pharmaceuticals |
Hasbro and Catalyst Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Catalyst Pharmaceuticals
The main advantage of trading using opposite Hasbro and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro position performs unexpectedly, Catalyst Pharmaceuticals 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 Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.The idea behind Hasbro Inc and Catalyst Pharmaceuticals 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.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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