Correlation Between Short Oil and Catalyst/millburn

Can any of the company-specific risk be diversified away by investing in both Short Oil and Catalyst/millburn 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 Short Oil and Catalyst/millburn into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Short Oil Gas and Catalystmillburn Dynamic Commodity, you can compare the effects of market volatilities on Short Oil and Catalyst/millburn 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 Short Oil with a short position of Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Catalyst/millburn.

Diversification Opportunities for Short Oil and Catalyst/millburn

-0.43

Correlation Coefficient

Short Oil  Catalyst/millburn

Very good diversification

The 3 months correlation between Short and Catalyst/millburn is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Catalystmillburn Dynamic Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Dyn and Short Oil 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 Short Oil Gas are associated (or correlated) with Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Dyn has no effect on the direction of Short Oil i.e., Short Oil and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Short Oil and Catalyst/millburn

Assuming the 90 days horizon Short Oil Gas is expected to under-perform the Catalyst/millburn. In addition to that, Short Oil is 2.53 times more volatile than Catalystmillburn Dynamic Commodity. It trades about -0.12 of its total potential returns per unit of risk. Catalystmillburn Dynamic Commodity is currently generating about 0.12 per unit of volatility. If you would invest  842.00  in Catalystmillburn Dynamic Commodity on December 25, 2024 and sell it today you would earn a total of  30.00  from holding Catalystmillburn Dynamic Commodity or generate 3.56% return on investment over 90 days.

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

Short Oil Gas  vs.  Catalystmillburn Dynamic Commo

Short Oil Gas

Risk-Adjusted Performance

Very Weak

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

Catalystmillburn Dyn

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Dynamic Commodity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Short Oil and Catalyst/millburn

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

The idea behind Short Oil Gas and Catalystmillburn Dynamic Commodity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.