Correlation Between Catalyst Intelligent and Vanguard Financials

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

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

Diversification Opportunities for Catalyst Intelligent and Vanguard Financials

0.58

Correlation Coefficient

Catalyst Intelligent  Vanguard Financials

Very weak diversification

The 3 months correlation between Catalyst and Vanguard is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Intelligent Alternati and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index and Catalyst Intelligent 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 Catalyst Intelligent Alternative are associated (or correlated) with Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Catalyst Intelligent i.e., Catalyst Intelligent and Vanguard Financials go up and down completely randomly.

Pair Corralation between Catalyst Intelligent and Vanguard Financials

Assuming the 90 days horizon Catalyst Intelligent Alternative is expected to under-perform the Vanguard Financials. In addition to that, Catalyst Intelligent is 1.07 times more volatile than Vanguard Financials Index. It trades about -0.14 of its total potential returns per unit of risk. Vanguard Financials Index is currently generating about 0.01 per unit of volatility. If you would invest  5,915  in Vanguard Financials Index on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Vanguard Financials Index or generate 0.07% return on investment over 90 days.

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

Catalyst Intelligent Alternati  vs.  Vanguard Financials Index

Catalyst Intelligent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Intelligent Alternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vanguard Financials Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Financials Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Financials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst Intelligent and Vanguard Financials

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

The idea behind Catalyst Intelligent Alternative and Vanguard Financials Index 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.