Correlation Between Albertsons Companies and Catalyst Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Catalyst Pharmaceuticals 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 Albertsons Companies and Catalyst Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Albertsons Companies and Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Albertsons Companies and Catalyst Pharmaceuticals 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 Albertsons Companies with a short position of Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Catalyst Pharmaceuticals.

Diversification Opportunities for Albertsons Companies and Catalyst Pharmaceuticals

0.16

Correlation Coefficient

Albertsons Companies  Catalyst Pharmaceuticals

Average diversification

The 3 months correlation between Albertsons and Catalyst is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Albertsons Companies and Catalyst Pharmaceuticals

Considering the 90-day investment horizon Albertsons Companies is expected to generate 1.03 times less return on investment than Catalyst Pharmaceuticals. But when comparing it to its historical volatility, Albertsons Companies is 1.26 times less risky than Catalyst Pharmaceuticals. It trades about 0.07 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,253  in Catalyst Pharmaceuticals on December 21, 2024 and sell it today you would earn a total of  63.00  from holding Catalyst Pharmaceuticals or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Albertsons Companies  vs.  Catalyst Pharmaceuticals

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albertsons Companies and Catalyst Pharmaceuticals

The main advantage of trading using opposite Albertsons Companies and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies position performs unexpectedly, Catalyst Pharmaceuticals 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 Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.

The idea behind Albertsons Companies and Catalyst Pharmaceuticals 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.