Correlation Between Catalyst/millburn and Technology Fund

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

Diversification Opportunities for Catalyst/millburn and Technology Fund

0.8

Correlation Coefficient

Catalyst/millburn  Technology Fund

Very poor diversification

The 3 months correlation between Catalyst/millburn and Technology is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Technology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Fund Class 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 Technology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Fund Class has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Technology Fund go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Technology Fund

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 0.39 times more return on investment than Technology Fund. However, Catalystmillburn Hedge Strategy is 2.59 times less risky than Technology Fund. It trades about -0.03 of its potential returns per unit of risk. Technology Fund Class is currently generating about -0.07 per unit of risk. If you would invest  3,743  in Catalystmillburn Hedge Strategy on December 28, 2024 and sell it today you would lose (48.00) from holding Catalystmillburn Hedge Strategy or give up 1.28% of portfolio value over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Technology Fund Class

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 fundamental indicators, Catalyst/millburn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Technology Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Catalyst/millburn and Technology Fund

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

The idea behind Catalystmillburn Hedge Strategy and Technology Fund Class 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.