Correlation Between Catalyst Insider and Guidemark

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

By analyzing existing cross correlation between Catalyst Insider Income and Guidemark E Fixed, you can compare the effects of market volatilities on Catalyst Insider and Guidemark 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 Insider with a short position of Guidemark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Insider and Guidemark.

Diversification Opportunities for Catalyst Insider and Guidemark

-0.55

Correlation Coefficient

Catalyst Insider  Guidemark

Excellent diversification

The 3 months correlation between Catalyst and Guidemark is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Insider Income and Guidemark E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark E Fixed and Catalyst Insider 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 Insider Income are associated (or correlated) with Guidemark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark E Fixed has no effect on the direction of Catalyst Insider i.e., Catalyst Insider and Guidemark go up and down completely randomly.

Pair Corralation between Catalyst Insider and Guidemark

Assuming the 90 days horizon Catalyst Insider Income is expected to generate 0.36 times more return on investment than Guidemark. However, Catalyst Insider Income is 2.77 times less risky than Guidemark. It trades about -0.13 of its potential returns per unit of risk. Guidemark E Fixed is currently generating about -0.4 per unit of risk. If you would invest  925.00  in Catalyst Insider Income on September 29, 2024 and sell it today you would lose (3.00) from holding Catalyst Insider Income or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Catalyst Insider Income  vs.  Guidemark E Fixed

Catalyst Insider Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Catalyst Insider is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark E Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidemark 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 Insider and Guidemark

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

The idea behind Catalyst Insider Income and Guidemark E Fixed 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.