Correlation Between Catalystsmh High and Catalystprinceton

Can any of the company-specific risk be diversified away by investing in both Catalystsmh High and Catalystprinceton 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 Catalystsmh High and Catalystprinceton 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 Catalystprinceton Floating Rate, you can compare the effects of market volatilities on Catalystsmh High and Catalystprinceton 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 Catalystsmh High with a short position of Catalystprinceton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalystsmh High and Catalystprinceton.

Diversification Opportunities for Catalystsmh High and Catalystprinceton

0.84

Correlation Coefficient

Catalystsmh High  Catalystprinceton

Very poor diversification

The 3 months correlation between Catalystsmh and Catalystprinceton is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Catalystsmh High Income and Catalystprinceton Floating Rat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystprinceton and Catalystsmh 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 Catalystprinceton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystprinceton has no effect on the direction of Catalystsmh High i.e., Catalystsmh High and Catalystprinceton go up and down completely randomly.

Pair Corralation between Catalystsmh High and Catalystprinceton

Assuming the 90 days horizon Catalystsmh High Income is expected to under-perform the Catalystprinceton. In addition to that, Catalystsmh High is 1.42 times more volatile than Catalystprinceton Floating Rate. It trades about -0.2 of its total potential returns per unit of risk. Catalystprinceton Floating Rate is currently generating about 0.09 per unit of volatility. If you would invest  925.00  in Catalystprinceton Floating Rate on September 27, 2024 and sell it today you would earn a total of  3.00  from holding Catalystprinceton Floating Rate or generate 0.32% return on investment over 90 days.

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

Catalystsmh High Income  vs.  Catalystprinceton Floating Rat

Catalystsmh High Income

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystsmh High Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalystsmh High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Catalystprinceton

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystprinceton Floating Rate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalystprinceton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalystsmh High and Catalystprinceton

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

The idea behind Catalystsmh High Income and Catalystprinceton Floating Rate 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 Global Correlations module to find global opportunities by holding instruments from different markets.