Correlation Between Financial Industries and Catalyst Insider

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

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

Diversification Opportunities for Financial Industries and Catalyst Insider

0.95

Correlation Coefficient

Financial Industries  Catalyst Insider

Almost no diversification

The 3 months correlation between Financial and Catalyst is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Catalyst Insider Buying in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Buying and Financial Industries 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 Financial Industries Fund 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 Buying has no effect on the direction of Financial Industries i.e., Financial Industries and Catalyst Insider go up and down completely randomly.

Pair Corralation between Financial Industries and Catalyst Insider

Assuming the 90 days horizon Financial Industries is expected to generate 1.69 times less return on investment than Catalyst Insider. But when comparing it to its historical volatility, Financial Industries Fund is 1.13 times less risky than Catalyst Insider. It trades about 0.18 of its potential returns per unit of risk. Catalyst Insider Buying is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,917  in Catalyst Insider Buying on April 29, 2025 and sell it today you would earn a total of  332.00  from holding Catalyst Insider Buying or generate 17.32% return on investment over 90 days.

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

Financial Industries Fund  vs.  Catalyst Insider Buying

Financial Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Financial Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Catalyst Insider Buying

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Buying are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Catalyst Insider showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Financial Industries and Catalyst Insider

The main advantage of trading using opposite Financial Industries and Catalyst Insider positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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 Financial Industries Fund and Catalyst Insider Buying 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.