Correlation Between Balanced Fund and Catalyst Insider

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

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

Diversification Opportunities for Balanced Fund and Catalyst Insider

0.7

Correlation Coefficient

Balanced Fund  Catalyst Insider

Poor diversification

The 3 months correlation between Balanced and Catalyst is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Catalyst Insider Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Income and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Catalyst Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Income has no effect on the direction of Balanced Fund i.e., Balanced Fund and Catalyst Insider go up and down completely randomly.

Pair Corralation between Balanced Fund and Catalyst Insider

Assuming the 90 days horizon Balanced Fund Investor is expected to generate 3.69 times more return on investment than Catalyst Insider. However, Balanced Fund is 3.69 times more volatile than Catalyst Insider Income. It trades about 0.12 of its potential returns per unit of risk. Catalyst Insider Income is currently generating about 0.36 per unit of risk. If you would invest  1,971  in Balanced Fund Investor on September 12, 2024 and sell it today you would earn a total of  67.00  from holding Balanced Fund Investor or generate 3.4% return on investment over 90 days.

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

Balanced Fund Investor  vs.  Catalyst Insider Income

Balanced Fund Investor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Catalyst Insider Income

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Catalyst Insider is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Catalyst Insider

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

The idea behind Balanced Fund Investor and Catalyst Insider 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.