Correlation Between Rational Special and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both Rational Special 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 Rational Special and Catalyst Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Special Situations and Catalyst Enhanced Income, you can compare the effects of market volatilities on Rational Special 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 Rational Special with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Special and Catalyst Enhanced.
Diversification Opportunities for Rational Special and Catalyst Enhanced
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rational and Catalyst is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rational Special Situations 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 Rational Special 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 Rational Special Situations 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 Rational Special i.e., Rational Special and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between Rational Special and Catalyst Enhanced
Assuming the 90 days horizon Rational Special Situations is expected to generate 0.51 times more return on investment than Catalyst Enhanced. However, Rational Special Situations is 1.97 times less risky than Catalyst Enhanced. It trades about 0.24 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 1,610 in Rational Special Situations on September 3, 2024 and sell it today you would earn a total of 209.00 from holding Rational Special Situations or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rational Special Situations vs. Catalyst Enhanced Income
Performance |
| Timeline |
| Rational Special Sit |
| Catalyst Enhanced Income |
Rational Special and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Special and Catalyst Enhanced
The main advantage of trading using opposite Rational Special and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Special 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.| Rational Special vs. Pimco Income Fund | Rational Special vs. Pimco Income Fund | Rational Special vs. Pimco Income Fund | Rational Special vs. Pimco Income Fund |
| Catalyst Enhanced vs. Blackrock Strategic Opps | Catalyst Enhanced vs. Blackrock Strategic Income | Catalyst Enhanced vs. Jpmorgan Strategic Income | Catalyst Enhanced vs. Jpmorgan Strategic 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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