Correlation Between Brandywine Realty and Catalyst Metals

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

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

Diversification Opportunities for Brandywine Realty and Catalyst Metals

-0.05

Correlation Coefficient

Brandywine Realty  Catalyst Metals

Good diversification

The 3 months correlation between Brandywine and Catalyst is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and Catalyst Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Brandywine Realty 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 Brandywine Realty Trust are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Brandywine Realty i.e., Brandywine Realty and Catalyst Metals go up and down completely randomly.

Pair Corralation between Brandywine Realty and Catalyst Metals

Considering the 90-day investment horizon Brandywine Realty is expected to generate 16.78 times less return on investment than Catalyst Metals. But when comparing it to its historical volatility, Brandywine Realty Trust is 3.26 times less risky than Catalyst Metals. It trades about 0.02 of its potential returns per unit of risk. Catalyst Metals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Catalyst Metals Limited on October 26, 2024 and sell it today you would earn a total of  156.00  from holding Catalyst Metals Limited or generate 288.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.09%
Values	Daily Returns

Brandywine Realty Trust  vs.  Catalyst Metals Limited

Brandywine Realty Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Brandywine Realty is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Catalyst Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Catalyst Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brandywine Realty and Catalyst Metals

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

The idea behind Brandywine Realty Trust and Catalyst Metals Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.