Correlation Between Catalyst Dynamic and Catalyst/aspect Enhanced

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

By analyzing existing cross correlation between Catalyst Dynamic Alpha and Catalystaspect Enhanced Multi Asset, you can compare the effects of market volatilities on Catalyst Dynamic and Catalyst/aspect 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 Catalyst Dynamic with a short position of Catalyst/aspect Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Dynamic and Catalyst/aspect Enhanced.

Diversification Opportunities for Catalyst Dynamic and Catalyst/aspect Enhanced

0.97

Correlation Coefficient

Catalyst Dynamic  Catalyst/aspect Enhanced

Almost no diversification

The 3 months correlation between Catalyst and Catalyst/aspect is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Dynamic Alpha and Catalystaspect Enhanced Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/aspect Enhanced and Catalyst Dynamic 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 Dynamic Alpha are associated (or correlated) with Catalyst/aspect 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/aspect Enhanced has no effect on the direction of Catalyst Dynamic i.e., Catalyst Dynamic and Catalyst/aspect Enhanced go up and down completely randomly.

Pair Corralation between Catalyst Dynamic and Catalyst/aspect Enhanced

Assuming the 90 days horizon Catalyst Dynamic Alpha is expected to generate 1.35 times more return on investment than Catalyst/aspect Enhanced. However, Catalyst Dynamic is 1.35 times more volatile than Catalystaspect Enhanced Multi Asset. It trades about 0.41 of its potential returns per unit of risk. Catalystaspect Enhanced Multi Asset is currently generating about 0.31 per unit of risk. If you would invest  1,894  in Catalyst Dynamic Alpha on April 21, 2025 and sell it today you would earn a total of  514.00  from holding Catalyst Dynamic Alpha or generate 27.14% return on investment over 90 days.

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

Catalyst Dynamic Alpha  vs.  Catalystaspect Enhanced Multi

Catalyst Dynamic Alpha

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Dynamic Alpha are ranked lower than 32 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Catalyst Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.

Catalyst/aspect Enhanced

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystaspect Enhanced Multi Asset are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalyst/aspect Enhanced showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalyst Dynamic and Catalyst/aspect Enhanced

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

The idea behind Catalyst Dynamic Alpha and Catalystaspect Enhanced Multi Asset 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.