Correlation Between Catalyst Insider and Jpmorgan Hedged

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

Diversification Opportunities for Catalyst Insider and Jpmorgan Hedged

0.73

Correlation Coefficient

Catalyst Insider  Jpmorgan Hedged

Poor diversification

The 3 months correlation between Catalyst and Jpmorgan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Insider Income and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity 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 Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Catalyst Insider i.e., Catalyst Insider and Jpmorgan Hedged go up and down completely randomly.

Pair Corralation between Catalyst Insider and Jpmorgan Hedged

Assuming the 90 days horizon Catalyst Insider Income is expected to generate 0.29 times more return on investment than Jpmorgan Hedged. However, Catalyst Insider Income is 3.49 times less risky than Jpmorgan Hedged. It trades about -0.06 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about -0.12 per unit of risk. If you would invest  923.00  in Catalyst Insider Income on October 17, 2024 and sell it today you would lose (2.00) from holding Catalyst Insider Income or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Catalyst Insider Income  vs.  Jpmorgan Hedged Equity

Catalyst Insider Income

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst Insider is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Hedged Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Hedged Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jpmorgan Hedged 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 Jpmorgan Hedged

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

The idea behind Catalyst Insider Income and Jpmorgan Hedged Equity 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.