Correlation Between Catalystmillburn and Catalyst/warrington

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

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

Diversification Opportunities for Catalystmillburn and Catalyst/warrington

0.82

Correlation Coefficient

Catalystmillburn  Catalyst/warrington

Very poor diversification

The 3 months correlation between Catalystmillburn and Catalyst/warrington is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Dynamic Commo and Catalystwarrington Strategic P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/warrington and Catalystmillburn 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 Catalystmillburn Dynamic Commodity are associated (or correlated) with Catalyst/warrington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst/warrington has no effect on the direction of Catalystmillburn i.e., Catalystmillburn and Catalyst/warrington go up and down completely randomly.

Pair Corralation between Catalystmillburn and Catalyst/warrington

Assuming the 90 days horizon Catalystmillburn Dynamic Commodity is expected to under-perform the Catalyst/warrington. In addition to that, Catalystmillburn is 2.08 times more volatile than Catalystwarrington Strategic Program. It trades about -0.25 of its total potential returns per unit of risk. Catalystwarrington Strategic Program is currently generating about -0.19 per unit of volatility. If you would invest  948.00  in Catalystwarrington Strategic Program on October 6, 2024 and sell it today you would lose (25.00) from holding Catalystwarrington Strategic Program or give up 2.64% of portfolio value over 90 days.

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

Catalystmillburn Dynamic Commo  vs.  Catalystwarrington Strategic P

Catalystmillburn Dyn

Risk-Adjusted Performance

0 of 100

Very Weak

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

Catalyst/warrington

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 forward indicators, Catalyst/warrington is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalystmillburn and Catalyst/warrington

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

The idea behind Catalystmillburn Dynamic Commodity 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.