Correlation Between Pace High and Catalyst Hedged
Can any of the company-specific risk be diversified away by investing in both Pace High and Catalyst Hedged 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 Pace High and Catalyst Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Catalyst Hedged Modity, you can compare the effects of market volatilities on Pace High and Catalyst Hedged 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 Pace High with a short position of Catalyst Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Catalyst Hedged.
Diversification Opportunities for Pace High and Catalyst Hedged
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Catalyst is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Catalyst Hedged Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Hedged Modity and Pace 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 Pace High Yield are associated (or correlated) with Catalyst Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Hedged Modity has no effect on the direction of Pace High i.e., Pace High and Catalyst Hedged go up and down completely randomly.
Pair Corralation between Pace High and Catalyst Hedged
Assuming the 90 days horizon Pace High Yield is expected to generate 0.16 times more return on investment than Catalyst Hedged. However, Pace High Yield is 6.29 times less risky than Catalyst Hedged. It trades about 0.28 of its potential returns per unit of risk. Catalyst Hedged Modity is currently generating about -0.04 per unit of risk. If you would invest 850.00 in Pace High Yield on August 26, 2024 and sell it today you would earn a total of 46.00 from holding Pace High Yield or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Catalyst Hedged Modity
Performance |
| Timeline |
| Pace High Yield |
| Catalyst Hedged Modity |
Pace High and Catalyst Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Catalyst Hedged
The main advantage of trading using opposite Pace High and Catalyst Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Catalyst Hedged 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 Hedged will offset losses from the drop in Catalyst Hedged's long position.| Pace High vs. Legg Mason Partners | Pace High vs. Dreyfus Institutional Reserves | Pace High vs. T Rowe Price | Pace High vs. T Rowe Price |
| Catalyst Hedged vs. Pace High Yield | Catalyst Hedged vs. Pace High Yield | Catalyst Hedged vs. Morningstar Aggressive Growth | Catalyst Hedged vs. Artisan High Income |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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