Correlation Between Catalyst/exceed Defined and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both Catalyst/exceed Defined 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 Catalyst/exceed Defined and Catalyst Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalystexceed Defined Shield and Catalyst Enhanced Income, you can compare the effects of market volatilities on Catalyst/exceed Defined 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 Catalyst/exceed Defined with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/exceed Defined and Catalyst Enhanced.
Diversification Opportunities for Catalyst/exceed Defined and Catalyst Enhanced
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Catalyst/exceed and Catalyst is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Catalystexceed Defined Shield 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 Catalyst/exceed Defined 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 Catalystexceed Defined Shield 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 Catalyst/exceed Defined i.e., Catalyst/exceed Defined and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between Catalyst/exceed Defined and Catalyst Enhanced
Assuming the 90 days horizon Catalystexceed Defined Shield is expected to generate 1.87 times more return on investment than Catalyst Enhanced. However, Catalyst/exceed Defined is 1.87 times more volatile than Catalyst Enhanced Income. It trades about 0.15 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.02 per unit of risk. If you would invest 1,033 in Catalystexceed Defined Shield on August 29, 2024 and sell it today you would earn a total of 16.00 from holding Catalystexceed Defined Shield or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystexceed Defined Shield vs. Catalyst Enhanced Income
Performance |
| Timeline |
| Catalyst/exceed Defined |
| Catalyst Enhanced Income |
Catalyst/exceed Defined and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/exceed Defined and Catalyst Enhanced
The main advantage of trading using opposite Catalyst/exceed Defined and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/exceed Defined 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.The idea behind Catalystexceed Defined Shield and Catalyst Enhanced Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Catalyst Enhanced vs. Catalystsmh High Income | Catalyst Enhanced vs. Catalystsmh High Income | Catalyst Enhanced vs. Catalystsmh High Income | Catalyst Enhanced vs. Catalyst Mlp Infrastructure |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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