Correlation Between Catalystmillburn and Catalyst Hedged

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

Diversification Opportunities for Catalystmillburn and Catalyst Hedged

0.89

Correlation Coefficient

Catalystmillburn  Catalyst Hedged

Very poor diversification

The 3 months correlation between Catalystmillburn and Catalyst is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Dynamic Commo and Catalyst Hedged Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Hedged Modity 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 Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Hedged Modity has no effect on the direction of Catalystmillburn i.e., Catalystmillburn and Catalyst Hedged go up and down completely randomly.

Pair Corralation between Catalystmillburn and Catalyst Hedged

Assuming the 90 days horizon Catalystmillburn Dynamic Commodity is expected to under-perform the Catalyst Hedged. In addition to that, Catalystmillburn is 1.01 times more volatile than Catalyst Hedged Modity. It trades about -0.03 of its total potential returns per unit of risk. Catalyst Hedged Modity is currently generating about -0.03 per unit of volatility. If you would invest  995.00  in Catalyst Hedged Modity on September 29, 2024 and sell it today you would lose (109.00) from holding Catalyst Hedged Modity or give up 10.95% 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.  Catalyst Hedged Modity

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 fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Catalyst Hedged Modity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Hedged Modity 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.

Pair Trading with Catalystmillburn and Catalyst Hedged

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

The idea behind Catalystmillburn Dynamic Commodity and Catalyst Hedged Modity 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 Transaction History module to view history of all your transactions and understand their impact on performance.