Correlation Between Catalyst/millburn and Dynamic Us

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

Diversification Opportunities for Catalyst/millburn and Dynamic Us

0.21

Correlation Coefficient

Catalyst/millburn  Dynamic Us

Modest diversification

The 3 months correlation between Catalyst/millburn and Dynamic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Dynamic Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Opportunity 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 Dynamic Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Opportunity has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Dynamic Us go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Dynamic Us

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to under-perform the Dynamic Us. In addition to that, Catalyst/millburn is 1.21 times more volatile than Dynamic Opportunity Fund. It trades about -0.04 of its total potential returns per unit of risk. Dynamic Opportunity Fund is currently generating about -0.02 per unit of volatility. If you would invest  1,445  in Dynamic Opportunity Fund on December 25, 2024 and sell it today you would lose (9.00) from holding Dynamic Opportunity Fund or give up 0.62% of portfolio value over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Dynamic Opportunity Fund

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 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.

Dynamic Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynamic Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dynamic Us 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 Dynamic Us

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

The idea behind Catalystmillburn Hedge Strategy and Dynamic Opportunity Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.