Correlation Between NYSE Composite and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Catalyst Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Catalyst Enhanced Income, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Catalyst Enhanced.
Diversification Opportunities for NYSE Composite and Catalyst Enhanced
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Catalyst is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between NYSE Composite and Catalyst Enhanced
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.65 times more return on investment than Catalyst Enhanced. However, NYSE Composite is 3.65 times more volatile than Catalyst Enhanced Income. It trades about 0.08 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.01 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Catalyst Enhanced Income
Performance |
| Timeline |
NYSE Composite and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Catalyst Enhanced Income
Pair trading matchups for Catalyst Enhanced
Pair Trading with NYSE Composite and Catalyst Enhanced
The main advantage of trading using opposite NYSE Composite and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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