Correlation Between Anchor Tactical and Catalyst/millburn

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

By analyzing existing cross correlation between Anchor Tactical Equity and Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Anchor Tactical and Catalyst/millburn 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 Anchor Tactical with a short position of Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anchor Tactical and Catalyst/millburn.

Diversification Opportunities for Anchor Tactical and Catalyst/millburn

0.56

Correlation Coefficient

Anchor Tactical  Catalyst/millburn

Very weak diversification

The 3 months correlation between Anchor and Catalyst/millburn is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Anchor Tactical Equity and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and Anchor Tactical 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 Anchor Tactical Equity are associated (or correlated) with Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Anchor Tactical i.e., Anchor Tactical and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Anchor Tactical and Catalyst/millburn

Assuming the 90 days horizon Anchor Tactical is expected to generate 2.09 times less return on investment than Catalyst/millburn. In addition to that, Anchor Tactical is 1.31 times more volatile than Catalystmillburn Hedge Strategy. It trades about 0.08 of its total potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.23 per unit of volatility. If you would invest  3,779  in Catalystmillburn Hedge Strategy on September 3, 2024 and sell it today you would earn a total of  257.00  from holding Catalystmillburn Hedge Strategy or generate 6.8% return on investment over 90 days.

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

Anchor Tactical Equity  vs.  Catalystmillburn Hedge Strateg

Anchor Tactical Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anchor Tactical Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Anchor Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Catalystmillburn Hedge

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalyst/millburn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Anchor Tactical and Catalyst/millburn

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

The idea behind Anchor Tactical Equity and Catalystmillburn Hedge Strategy 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.