Correlation Between Catalyst/smh High and American Beacon

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

By analyzing existing cross correlation between Catalystsmh High Income and American Beacon Ssi, you can compare the effects of market volatilities on Catalyst/smh High and American Beacon 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/smh High with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/smh High and American Beacon.

Diversification Opportunities for Catalyst/smh High and American Beacon

0.71

Correlation Coefficient

Catalyst/smh High  American Beacon

Poor diversification

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

Pair Corralation between Catalyst/smh High and American Beacon

If you would invest  312.00  in Catalystsmh High Income on October 9, 2024 and sell it today you would earn a total of  59.00  from holding Catalystsmh High Income or generate 18.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.2%
Values	Daily Returns

Catalystsmh High Income  vs.  American Beacon Ssi

Catalystsmh High Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystsmh High Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Catalyst/smh High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Beacon Ssi

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days American Beacon Ssi has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst/smh High and American Beacon

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

The idea behind Catalystsmh High Income and American Beacon Ssi 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.