Correlation Between Catalyst/millburn and Federated Floating

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

By analyzing existing cross correlation between Catalystmillburn Hedge Strategy and Federated Floating Rate, you can compare the effects of market volatilities on Catalyst/millburn and Federated Floating 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/millburn with a short position of Federated Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/millburn and Federated Floating.

Diversification Opportunities for Catalyst/millburn and Federated Floating

0.66

Correlation Coefficient

Catalyst/millburn  Federated Floating

Poor diversification

The 3 months correlation between Catalyst/millburn and Federated is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Federated Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Floating Rate and Catalyst/millburn 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 Hedge Strategy are associated (or correlated) with Federated Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Floating Rate has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Federated Floating go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Federated Floating

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 3.46 times more return on investment than Federated Floating. However, Catalyst/millburn is 3.46 times more volatile than Federated Floating Rate. It trades about 0.11 of its potential returns per unit of risk. Federated Floating Rate is currently generating about 0.2 per unit of risk. If you would invest  3,837  in Catalystmillburn Hedge Strategy on October 26, 2024 and sell it today you would earn a total of  140.00  from holding Catalystmillburn Hedge Strategy or generate 3.65% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Federated Floating Rate

Catalystmillburn Hedge

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Catalyst/millburn is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Federated Floating Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Floating Rate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Federated Floating 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/millburn and Federated Floating

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

The idea behind Catalystmillburn Hedge Strategy and Federated 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.