Correlation Between Catalyst/millburn and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both Catalyst/millburn and Sterling Capital 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 Sterling Capital 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 Sterling Capital Equity, you can compare the effects of market volatilities on Catalyst/millburn and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/millburn and Sterling Capital.

Diversification Opportunities for Catalyst/millburn and Sterling Capital

-0.13

Correlation Coefficient

Catalyst/millburn  Sterling Capital

Good diversification

The 3 months correlation between Catalyst/millburn and Sterling is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Equity has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Sterling Capital go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Sterling Capital

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 0.21 times more return on investment than Sterling Capital. However, Catalystmillburn Hedge Strategy is 4.86 times less risky than Sterling Capital. It trades about 0.12 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about -0.12 per unit of risk. If you would invest  3,822  in Catalystmillburn Hedge Strategy on October 24, 2024 and sell it today you would earn a total of  149.00  from holding Catalystmillburn Hedge Strategy or generate 3.9% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Sterling Capital Equity

Catalystmillburn Hedge

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 9 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Catalyst/millburn and Sterling Capital

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

The idea behind Catalystmillburn Hedge Strategy and Sterling Capital 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.