Correlation Between Catalyst Media and VeriSign

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

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

Diversification Opportunities for Catalyst Media and VeriSign

-0.71

Correlation Coefficient

Catalyst Media  VeriSign

Pay attention - limited upside

The 3 months correlation between Catalyst and VeriSign is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign and Catalyst Media 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 Media Group are associated (or correlated) with VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Catalyst Media i.e., Catalyst Media and VeriSign go up and down completely randomly.

Pair Corralation between Catalyst Media and VeriSign

Assuming the 90 days trading horizon Catalyst Media Group is expected to under-perform the VeriSign. In addition to that, Catalyst Media is 1.06 times more volatile than VeriSign. It trades about -0.03 of its total potential returns per unit of risk. VeriSign is currently generating about 0.09 per unit of volatility. If you would invest  17,627  in VeriSign on September 27, 2024 and sell it today you would earn a total of  2,454  from holding VeriSign or generate 13.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.64%
Values	Daily Returns

Catalyst Media Group  vs.  VeriSign

Catalyst Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

VeriSign

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Catalyst Media and VeriSign

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

The idea behind Catalyst Media Group and VeriSign 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.