Correlation Between Catalyst/smh High and Catalyst/exceed Defined
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh High and Catalyst/exceed Defined 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/exceed Defined 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 Catalystexceed Defined Shield, you can compare the effects of market volatilities on Catalyst/smh High and Catalyst/exceed Defined 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/exceed Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and Catalyst/exceed Defined.
Diversification Opportunities for Catalyst/smh High and Catalyst/exceed Defined
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalyst/smh and Catalyst/exceed is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Catalystexceed Defined Shield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/exceed Defined 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/exceed Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst/exceed Defined has no effect on the direction of Catalyst/smh High i.e., Catalyst/smh High and Catalyst/exceed Defined go up and down completely randomly.
Pair Corralation between Catalyst/smh High and Catalyst/exceed Defined
Assuming the 90 days horizon Catalyst/smh High is expected to generate 1.22 times less return on investment than Catalyst/exceed Defined. But when comparing it to its historical volatility, Catalystsmh High Income is 1.57 times less risky than Catalyst/exceed Defined. It trades about 0.15 of its potential returns per unit of risk. Catalystexceed Defined Shield is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 944.00 in Catalystexceed Defined Shield on November 2, 2024 and sell it today you would earn a total of 48.00 from holding Catalystexceed Defined Shield or generate 5.08% 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. Catalystexceed Defined Shield
Performance |
| Timeline |
| Catalystsmh High Income |
| Catalyst/exceed Defined |
Catalyst/smh High and Catalyst/exceed Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh High and Catalyst/exceed Defined
The main advantage of trading using opposite Catalyst/smh High and Catalyst/exceed Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh High position performs unexpectedly, Catalyst/exceed Defined 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/exceed Defined will offset losses from the drop in Catalyst/exceed Defined's long position.| Catalyst/smh High vs. T Rowe Price | Catalyst/smh High vs. Putnam Global Financials | Catalyst/smh High vs. Prudential Financial Services | Catalyst/smh High vs. Blackstone Secured Lending |
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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