Correlation Between Catalyst/smh High and Wilmington Trust
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and Wilmington Trust 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 Wilmington Trust 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 Wilmington Trust Retirement, you can compare the effects of market volatilities on Catalyst/smh High and Wilmington Trust 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 Wilmington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and Wilmington Trust.
Diversification Opportunities for Catalyst/smh High and Wilmington Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalyst/smh and Wilmington is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Wilmington Trust Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Trust Ret 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 Wilmington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Trust Ret has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and Wilmington Trust go up and down completely randomly.
Pair Corralation between Catalyst/smh High and Wilmington Trust
Assuming the 90 days horizon Catalystsmh High Income is expected to generate 0.32 times more return on investment than Wilmington Trust. However, Catalystsmh High Income is 3.11 times less risky than Wilmington Trust. It trades about -0.2 of its potential returns per unit of risk. Wilmington Trust Retirement is currently generating about -0.21 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 (5.00) from holding Catalystsmh High Income or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystsmh High Income vs. Wilmington Trust Retirement
Performance |
| Timeline |
| Catalystsmh High Income |
| Wilmington Trust Ret |
Catalyst/smh High and Wilmington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and Wilmington Trust
The main advantage of trading using opposite Catalyst/smh High and Wilmington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, Wilmington Trust 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 Wilmington Trust will offset losses from the drop in Wilmington Trust's long position.| Catalyst/smh High vs. Profunds Large Cap Growth | Catalyst/smh High vs. M Large Cap | Catalyst/smh High vs. Americafirst Large Cap | Catalyst/smh High vs. Qs Large Cap |
| Wilmington Trust vs. Catalystsmh High Income | Wilmington Trust vs. Needham Aggressive Growth | Wilmington Trust vs. Ab High Income | Wilmington Trust vs. Inverse 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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