Correlation Between Catalyst/smh High and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Large, you can compare the effects of market volatilities on Catalyst/smh High and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and Goldman Sachs.
Diversification Opportunities for Catalyst/smh High and Goldman Sachs
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Catalyst/smh and Goldman is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Large has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and Goldman Sachs go up and down completely randomly.
Pair Corralation between Catalyst/smh High and Goldman Sachs
Assuming the 90 days horizon Catalystsmh High Income is expected to generate 0.25 times more return on investment than Goldman Sachs. However, Catalystsmh High Income is 4.03 times less risky than Goldman Sachs. It trades about 0.22 of its potential returns per unit of risk. Goldman Sachs Large is currently generating about -0.02 per unit of risk. If you would invest 368.00 in Catalystsmh High Income on October 20, 2024 and sell it today you would earn a total of 5.00 from holding Catalystsmh High Income or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystsmh High Income vs. Goldman Sachs Large
Performance |
| Timeline |
| Catalystsmh High Income |
| Goldman Sachs Large |
Catalyst/smh High and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and Goldman Sachs
The main advantage of trading using opposite Catalyst/smh High and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Catalyst/smh High vs. Alpsalerian Energy Infrastructure | Catalyst/smh High vs. Invesco Energy Fund | Catalyst/smh High vs. Franklin Natural Resources | Catalyst/smh High vs. Ivy Natural Resources |
| Goldman Sachs vs. Catalystsmh High Income | Goldman Sachs vs. Lord Abbett Short | Goldman Sachs vs. Siit High Yield | Goldman Sachs vs. Multi Manager High Yield |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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