Correlation Between Catalyst/smh High and Catalyst Dynamic
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and Catalyst Dynamic 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 Dynamic 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 Dynamic Alpha, you can compare the effects of market volatilities on Catalyst/smh High and Catalyst Dynamic 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 Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and Catalyst Dynamic.
Diversification Opportunities for Catalyst/smh High and Catalyst Dynamic
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalyst/smh and Catalyst is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Catalyst Dynamic Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Dynamic Alpha 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 Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Dynamic Alpha has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and Catalyst Dynamic go up and down completely randomly.
Pair Corralation between Catalyst/smh High and Catalyst Dynamic
Assuming the 90 days horizon Catalyst/smh High is expected to generate 1.44 times less return on investment than Catalyst Dynamic. But when comparing it to its historical volatility, Catalystsmh High Income is 2.7 times less risky than Catalyst Dynamic. It trades about 0.13 of its potential returns per unit of risk. Catalyst Dynamic Alpha is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,962 in Catalyst Dynamic Alpha on August 29, 2024 and sell it today you would earn a total of 700.00 from holding Catalyst Dynamic Alpha or generate 35.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystsmh High Income vs. Catalyst Dynamic Alpha
Performance |
| Timeline |
| Catalystsmh High Income |
| Catalyst Dynamic Alpha |
Catalyst/smh High and Catalyst Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and Catalyst Dynamic
The main advantage of trading using opposite Catalyst/smh High and Catalyst Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, Catalyst Dynamic 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 Dynamic will offset losses from the drop in Catalyst Dynamic's long position.| Catalyst/smh High vs. High Yield Bond | Catalyst/smh High vs. Artisan High Income | Catalyst/smh High vs. Pacific Funds High | Catalyst/smh High vs. Victory High Yield |
| Catalyst Dynamic vs. Nasdaq 100 Fund Class | Catalyst Dynamic vs. Select Fund C | Catalyst Dynamic vs. Nasdaq 100 Fund Class | Catalyst Dynamic vs. Select Fund R |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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