Correlation Between Catalyst/smh High and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and Catalyst Enhanced 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 Catalyst Enhanced 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 Catalyst Enhanced Income, you can compare the effects of market volatilities on Catalyst/smh High and Catalyst Enhanced 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 Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and Catalyst Enhanced.
Diversification Opportunities for Catalyst/smh High and Catalyst Enhanced
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catalyst/smh and Catalyst is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Catalyst Enhanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Enhanced 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 Catalyst Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Enhanced Income has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between Catalyst/smh High and Catalyst Enhanced
Assuming the 90 days horizon Catalystsmh High Income is expected to generate 1.05 times more return on investment than Catalyst Enhanced. However, Catalyst/smh High is 1.05 times more volatile than Catalyst Enhanced Income. It trades about 0.21 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.09 per unit of risk. If you would invest 366.00 in Catalystsmh High Income on August 25, 2024 and sell it today you would earn a total of 11.00 from holding Catalystsmh High Income or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Catalystsmh High Income vs. Catalyst Enhanced Income
Performance |
| Timeline |
| Catalystsmh High Income |
| Catalyst Enhanced Income |
Catalyst/smh High and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and Catalyst Enhanced
The main advantage of trading using opposite Catalyst/smh High and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, Catalyst Enhanced 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 Enhanced will offset losses from the drop in Catalyst Enhanced's long position.| Catalyst/smh High vs. Prudential High Yield | Catalyst/smh High vs. Parametric Modity Strategy | Catalyst/smh High vs. HUMANA INC | Catalyst/smh High vs. Aquagold International |
| Catalyst Enhanced vs. Guggenheim Risk Managed | Catalyst Enhanced vs. Real Estate Fund | Catalyst Enhanced vs. Commonwealth Real Estate | Catalyst Enhanced vs. Dunham Real Estate |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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