Correlation Between Catalyst Dynamic and Nasdaq-100 Fund

Can any of the company-specific risk be diversified away by investing in both Catalyst Dynamic and Nasdaq-100 Fund 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 Dynamic and Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catalyst Dynamic Alpha and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Catalyst Dynamic and Nasdaq-100 Fund 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 Dynamic with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Nasdaq-100 Fund.

Diversification Opportunities for Catalyst Dynamic and Nasdaq-100 Fund

0.97

Correlation Coefficient

Catalyst Dynamic  Nasdaq-100 Fund

Almost no diversification

The 3 months correlation between Catalyst and Nasdaq-100 is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Catalyst Dynamic 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 Dynamic Alpha are associated (or correlated) with Nasdaq-100 Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Fund has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Nasdaq-100 Fund go up and down completely randomly.

Pair Corralation between Catalyst Dynamic and Nasdaq-100 Fund

Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 0.87 times more return on investment than Nasdaq-100 Fund. However, Catalyst Dynamic Alpha is 1.15 times less risky than Nasdaq-100 Fund. It trades about 0.2 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.14 per unit of risk. If you would invest  2,380  in Catalyst Dynamic Alpha on September 3, 2024 and sell it today you would earn a total of  280.00  from holding Catalyst Dynamic Alpha or generate 11.76% return on investment over 90 days.

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

Catalyst Dynamic Alpha  vs.  Nasdaq 100 Fund Class

Catalyst Dynamic Alpha

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Dynamic Alpha are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalyst Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nasdaq 100 Fund

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Fund Class are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq-100 Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalyst Dynamic and Nasdaq-100 Fund

The main advantage of trading using opposite Catalyst Dynamic and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Dynamic position performs unexpectedly, Nasdaq-100 Fund 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 Nasdaq-100 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.

The idea behind Catalyst Dynamic Alpha and Nasdaq 100 Fund Class 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.