Correlation Between CATLIN GROUP and ETC On

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

By analyzing existing cross correlation between CATLIN GROUP and ETC on CMCI, you can compare the effects of market volatilities on CATLIN GROUP and ETC On 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 CATLIN GROUP with a short position of ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and ETC On.

Diversification Opportunities for CATLIN GROUP and ETC On

-0.22

Correlation Coefficient

CATLIN GROUP  ETC On

Very good diversification

The 3 months correlation between CATLIN and ETC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and ETC On go up and down completely randomly.

Pair Corralation between CATLIN GROUP and ETC On

Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the ETC On. In addition to that, CATLIN GROUP is 1.05 times more volatile than ETC on CMCI. It trades about -0.1 of its total potential returns per unit of risk. ETC on CMCI is currently generating about 0.07 per unit of volatility. If you would invest  17,440  in ETC on CMCI on December 27, 2024 and sell it today you would earn a total of  596.00  from holding ETC on CMCI or generate 3.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CATLIN GROUP   vs.  ETC on CMCI

CATLIN GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ETC on CMCI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETC on CMCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CATLIN GROUP and ETC On

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

The idea behind CATLIN GROUP and ETC on CMCI 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.