Correlation Between Rbc Microcap and Catalyst Enhanced

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

By analyzing existing cross correlation between Rbc Microcap Value and Catalyst Enhanced Income, you can compare the effects of market volatilities on Rbc Microcap and Catalyst Enhanced 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 Rbc Microcap with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc Microcap and Catalyst Enhanced.

Diversification Opportunities for Rbc Microcap and Catalyst Enhanced

-0.71

Correlation Coefficient

Rbc Microcap  Catalyst Enhanced

Pay attention - limited upside

The 3 months correlation between Rbc and Catalyst is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Microcap Value and Catalyst Enhanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Enhanced Income and Rbc Microcap 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 Rbc Microcap Value are associated (or correlated) with Catalyst Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Enhanced Income has no effect on the direction of Rbc Microcap i.e., Rbc Microcap and Catalyst Enhanced go up and down completely randomly.

Pair Corralation between Rbc Microcap and Catalyst Enhanced

Assuming the 90 days horizon Rbc Microcap Value is expected to generate 5.34 times more return on investment than Catalyst Enhanced. However, Rbc Microcap is 5.34 times more volatile than Catalyst Enhanced Income. It trades about 0.16 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.16 per unit of risk. If you would invest  2,757  in Rbc Microcap Value on September 12, 2024 and sell it today you would earn a total of  360.00  from holding Rbc Microcap Value or generate 13.06% return on investment over 90 days.

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

Rbc Microcap Value  vs.  Catalyst Enhanced Income

Rbc Microcap Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Microcap Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Microcap showed solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Enhanced Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rbc Microcap and Catalyst Enhanced

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

The idea behind Rbc Microcap Value and Catalyst Enhanced Income 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.