Correlation Between XLMedia PLC and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and Catalyst Media 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 XLMedia PLC and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and Catalyst Media Group, you can compare the effects of market volatilities on XLMedia PLC and Catalyst Media 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 XLMedia PLC with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Catalyst Media.
Diversification Opportunities for XLMedia PLC and Catalyst Media
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XLMedia and Catalyst is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Catalyst Media go up and down completely randomly.
Pair Corralation between XLMedia PLC and Catalyst Media
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 4.25 times more return on investment than Catalyst Media. However, XLMedia PLC is 4.25 times more volatile than Catalyst Media Group. It trades about 0.05 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.04 per unit of risk. If you would invest 705.00 in XLMedia PLC on October 22, 2024 and sell it today you would earn a total of 345.00 from holding XLMedia PLC or generate 48.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. Catalyst Media Group
Performance |
| Timeline |
| XLMedia PLC |
| Catalyst Media Group |
XLMedia PLC and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and Catalyst Media
The main advantage of trading using opposite XLMedia PLC and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, Catalyst Media 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 Media will offset losses from the drop in Catalyst Media's long position.| XLMedia PLC vs. GoldMining | XLMedia PLC vs. Alliance Data Systems | XLMedia PLC vs. Datalogic | XLMedia PLC vs. Datagroup SE |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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