Correlation Between Catalyst/millburn and Allspring Ultra

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

Diversification Opportunities for Catalyst/millburn and Allspring Ultra

-0.57

Correlation Coefficient

Catalyst/millburn  Allspring Ultra

Excellent diversification

The 3 months correlation between Catalyst/millburn and Allspring is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Allspring Ultra Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allspring Ultra Short 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 Allspring Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allspring Ultra Short has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Allspring Ultra go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Allspring Ultra

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to under-perform the Allspring Ultra. In addition to that, Catalyst/millburn is 7.21 times more volatile than Allspring Ultra Short Term. It trades about -0.04 of its total potential returns per unit of risk. Allspring Ultra Short Term is currently generating about 0.24 per unit of volatility. If you would invest  870.00  in Allspring Ultra Short Term on December 26, 2024 and sell it today you would earn a total of  12.00  from holding Allspring Ultra Short Term or generate 1.38% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Allspring Ultra Short Term

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.

Allspring Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allspring Ultra Short Term are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Allspring Ultra 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 Allspring Ultra

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

The idea behind Catalystmillburn Hedge Strategy and Allspring Ultra Short Term 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.