Correlation Between Catalyst/millburn and Vanguard Multi-sector

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

Diversification Opportunities for Catalyst/millburn and Vanguard Multi-sector

-0.65

Correlation Coefficient

Catalyst/millburn  Vanguard Multi-sector

Excellent diversification

The 3 months correlation between Catalyst/millburn and Vanguard is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Vanguard Multi Sector Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Multi Sector 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 Vanguard Multi-sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Multi Sector has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Vanguard Multi-sector go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Vanguard Multi-sector

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to under-perform the Vanguard Multi-sector. In addition to that, Catalyst/millburn is 4.0 times more volatile than Vanguard Multi Sector Income. It trades about -0.04 of its total potential returns per unit of risk. Vanguard Multi Sector Income is currently generating about 0.21 per unit of volatility. If you would invest  1,778  in Vanguard Multi Sector Income on December 25, 2024 and sell it today you would earn a total of  38.00  from holding Vanguard Multi Sector Income or generate 2.14% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Vanguard Multi Sector Income

Catalystmillburn Hedge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalystmillburn Hedge Strategy has generated negative risk-adjusted returns adding no value to fund investors. 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.

Vanguard Multi Sector

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Multi Sector Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Multi-sector 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 Vanguard Multi-sector

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

The idea behind Catalystmillburn Hedge Strategy and Vanguard Multi Sector Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.