Correlation Between Catalyst Media and IShares Dow

Can any of the company-specific risk be diversified away by investing in both Catalyst Media and IShares Dow 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 IShares Dow 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 iShares Dow Jones, you can compare the effects of market volatilities on Catalyst Media and IShares Dow 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 IShares Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and IShares Dow.

Diversification Opportunities for Catalyst Media and IShares Dow

0.39

Correlation Coefficient

Catalyst Media  IShares Dow

Weak diversification

The 3 months correlation between Catalyst and IShares is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones 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 IShares Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of Catalyst Media i.e., Catalyst Media and IShares Dow go up and down completely randomly.

Pair Corralation between Catalyst Media and IShares Dow

Assuming the 90 days trading horizon Catalyst Media Group is expected to generate 3.46 times more return on investment than IShares Dow. However, Catalyst Media is 3.46 times more volatile than iShares Dow Jones. It trades about 0.05 of its potential returns per unit of risk. iShares Dow Jones is currently generating about 0.12 per unit of risk. If you would invest  7,838  in Catalyst Media Group on October 20, 2024 and sell it today you would earn a total of  162.00  from holding Catalyst Media Group or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Catalyst Media Group  vs.  iShares Dow Jones

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.

iShares Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Dow 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 IShares Dow

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

The idea behind Catalyst Media Group and iShares Dow Jones 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.