Correlation Between Catalyst/smh High and American High-income
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and American High-income 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/smh High and American High-income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalystsmh High Income and American High Income Municipal, you can compare the effects of market volatilities on Catalyst/smh High and American High-income 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/smh High with a short position of American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and American High-income.
Diversification Opportunities for Catalyst/smh High and American High-income
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Catalyst/smh and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Catalyst/smh High 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 Catalystsmh High Income are associated (or correlated) with American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and American High-income go up and down completely randomly.
Pair Corralation between Catalyst/smh High and American High-income
Assuming the 90 days horizon Catalystsmh High Income is expected to generate 1.09 times more return on investment than American High-income. However, Catalyst/smh High is 1.09 times more volatile than American High Income Municipal. It trades about -0.24 of its potential returns per unit of risk. American High Income Municipal is currently generating about -0.31 per unit of risk. If you would invest 377.00 in Catalystsmh High Income on October 11, 2024 and sell it today you would lose (6.00) from holding Catalystsmh High Income or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Catalystsmh High Income vs. American High Income Municipal
Performance |
| Timeline |
| Catalystsmh High Income |
| American High Income |
Catalyst/smh High and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and American High-income
The main advantage of trading using opposite Catalyst/smh High and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, American High-income 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 American High-income will offset losses from the drop in American High-income's long position.| Catalyst/smh High vs. Americafirst Large Cap | Catalyst/smh High vs. M Large Cap | Catalyst/smh High vs. Fisher Large Cap | Catalyst/smh High vs. Avantis Large Cap |
| American High-income vs. Barings High Yield | American High-income vs. Millerhoward High Income | American High-income vs. Catalystsmh High Income | American High-income vs. Ab High Income |
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 Stocks Directory module to find actively traded stocks across global markets.
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