Correlation Between Catalyst/smh Total and Catalyst Enhanced
Can any of the company-specific risk be diversified away by investing in both Catalyst/smh Total 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/smh Total and Catalyst Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalystsmh Total Return and Catalyst Enhanced Income, you can compare the effects of market volatilities on Catalyst/smh Total 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/smh Total with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh Total and Catalyst Enhanced.
Diversification Opportunities for Catalyst/smh Total and Catalyst Enhanced
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CATALYST/SMH and Catalyst is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh Total Return 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/smh Total 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 Total Return 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/smh Total i.e., Catalyst/smh Total and Catalyst Enhanced go up and down completely randomly.
Pair Corralation between Catalyst/smh Total and Catalyst Enhanced
Assuming the 90 days horizon Catalystsmh Total Return is expected to generate 1.75 times more return on investment than Catalyst Enhanced. However, Catalyst/smh Total is 1.75 times more volatile than Catalyst Enhanced Income. It trades about 0.21 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 488.00 in Catalystsmh Total Return on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Catalystsmh Total Return or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalystsmh Total Return vs. Catalyst Enhanced Income
Performance |
| Timeline |
| Catalystsmh Total Return |
| Catalyst Enhanced Income |
Catalyst/smh Total and Catalyst Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst/smh Total and Catalyst Enhanced
The main advantage of trading using opposite Catalyst/smh Total and Catalyst Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/smh Total 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.| Catalyst/smh Total vs. Delaware Healthcare Fund | Catalyst/smh Total vs. Allianzgi Health Sciences | Catalyst/smh Total vs. Prudential Health Sciences | Catalyst/smh Total vs. Health Biotchnology Portfolio |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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