Correlation Between Catalyst/millburn and Acclivity Small

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

Diversification Opportunities for Catalyst/millburn and Acclivity Small

0.79

Correlation Coefficient

Catalyst/millburn  Acclivity Small

Poor diversification

The 3 months correlation between Catalyst/millburn and Acclivity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Acclivity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acclivity Small Cap 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 Acclivity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acclivity Small Cap has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Acclivity Small go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Acclivity Small

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 0.56 times more return on investment than Acclivity Small. However, Catalystmillburn Hedge Strategy is 1.78 times less risky than Acclivity Small. It trades about -0.03 of its potential returns per unit of risk. Acclivity Small Cap is currently generating about -0.29 per unit of risk. If you would invest  3,976  in Catalystmillburn Hedge Strategy on October 11, 2024 and sell it today you would lose (14.00) from holding Catalystmillburn Hedge Strategy or give up 0.35% of portfolio value over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Acclivity Small Cap

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

Acclivity Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acclivity Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Acclivity Small is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst/millburn and Acclivity Small

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

The idea behind Catalystmillburn Hedge Strategy and Acclivity Small Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.