Correlation Between Catalystmap Global and Catalystwarrington

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

By analyzing existing cross correlation between Catalystmap Global Equity and Catalystwarrington Strategic Program, you can compare the effects of market volatilities on Catalystmap Global and Catalystwarrington 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 Catalystmap Global with a short position of Catalystwarrington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalystmap Global and Catalystwarrington.

Diversification Opportunities for Catalystmap Global and Catalystwarrington

0.91

Correlation Coefficient

Catalystmap Global  Catalystwarrington

Almost no diversification

The 3 months correlation between Catalystmap and Catalystwarrington is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmap Global Equity and Catalystwarrington Strategic P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystwarrington and Catalystmap Global 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 Catalystmap Global Equity are associated (or correlated) with Catalystwarrington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystwarrington has no effect on the direction of Catalystmap Global i.e., Catalystmap Global and Catalystwarrington go up and down completely randomly.

Pair Corralation between Catalystmap Global and Catalystwarrington

Assuming the 90 days horizon Catalystmap Global Equity is expected to under-perform the Catalystwarrington. In addition to that, Catalystmap Global is 2.85 times more volatile than Catalystwarrington Strategic Program. It trades about -0.02 of its total potential returns per unit of risk. Catalystwarrington Strategic Program is currently generating about -0.03 per unit of volatility. If you would invest  914.00  in Catalystwarrington Strategic Program on September 29, 2024 and sell it today you would lose (11.00) from holding Catalystwarrington Strategic Program or give up 1.2% of portfolio value over 90 days.

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

Catalystmap Global Equity  vs.  Catalystwarrington Strategic P

Catalystmap Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Catalystwarrington

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Catalystmap Global and Catalystwarrington

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

The idea behind Catalystmap Global Equity and Catalystwarrington Strategic Program 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.