Correlation Between Catalyst Exceed and Smallcap World

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

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

Diversification Opportunities for Catalyst Exceed and Smallcap World

0.69

Correlation Coefficient

Catalyst Exceed  Smallcap World

Poor diversification

The 3 months correlation between Catalyst and Smallcap is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Exceed Defined and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Catalyst Exceed 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 Catalyst Exceed Defined are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Catalyst Exceed i.e., Catalyst Exceed and Smallcap World go up and down completely randomly.

Pair Corralation between Catalyst Exceed and Smallcap World

Assuming the 90 days horizon Catalyst Exceed Defined is expected to generate 1.05 times more return on investment than Smallcap World. However, Catalyst Exceed is 1.05 times more volatile than Smallcap World Fund. It trades about 0.38 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.37 per unit of risk. If you would invest  1,047  in Catalyst Exceed Defined on April 20, 2025 and sell it today you would earn a total of  233.00  from holding Catalyst Exceed Defined or generate 22.25% return on investment over 90 days.

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

Catalyst Exceed Defined  vs.  Smallcap World Fund

Catalyst Exceed Defined

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Exceed Defined are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Catalyst Exceed showed solid returns over the last few months and may actually be approaching a breakup point.

Smallcap World

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Smallcap World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Exceed and Smallcap World

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

The idea behind Catalyst Exceed Defined and Smallcap World 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.