Correlation Between SVB T and Catalyst Bancorp

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

By analyzing existing cross correlation between SVB T Corp and Catalyst Bancorp, you can compare the effects of market volatilities on SVB T and Catalyst Bancorp 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 SVB T with a short position of Catalyst Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SVB T and Catalyst Bancorp.

Diversification Opportunities for SVB T and Catalyst Bancorp

-0.05

Correlation Coefficient

SVB T  Catalyst Bancorp

Good diversification

The 3 months correlation between SVB and Catalyst is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SVB T Corp and Catalyst Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Bancorp and SVB T 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 SVB T Corp are associated (or correlated) with Catalyst Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Bancorp has no effect on the direction of SVB T i.e., SVB T and Catalyst Bancorp go up and down completely randomly.

Pair Corralation between SVB T and Catalyst Bancorp

Given the investment horizon of 90 days SVB T Corp is expected to generate 0.59 times more return on investment than Catalyst Bancorp. However, SVB T Corp is 1.7 times less risky than Catalyst Bancorp. It trades about 0.04 of its potential returns per unit of risk. Catalyst Bancorp is currently generating about -0.02 per unit of risk. If you would invest  4,225  in SVB T Corp on December 25, 2024 and sell it today you would earn a total of  50.00  from holding SVB T Corp or generate 1.18% return on investment over 90 days.

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

SVB T Corp  vs.  Catalyst Bancorp

SVB T Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SVB T Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, SVB T is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Catalyst Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Catalyst Bancorp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SVB T and Catalyst Bancorp

The main advantage of trading using opposite SVB T and Catalyst Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVB T position performs unexpectedly, Catalyst Bancorp 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 Bancorp will offset losses from the drop in Catalyst Bancorp's long position.

The idea behind SVB T Corp and Catalyst Bancorp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.