Correlation Between Dynamic Opportunity and Catalystmillburn

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

By analyzing existing cross correlation between Dynamic Opportunity Fund and Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Dynamic Opportunity and Catalystmillburn 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 Dynamic Opportunity with a short position of Catalystmillburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Opportunity and Catalystmillburn.

Diversification Opportunities for Dynamic Opportunity and Catalystmillburn

0.88

Correlation Coefficient

Dynamic Opportunity  Catalystmillburn

Very poor diversification

The 3 months correlation between Dynamic and Catalystmillburn is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Opportunity Fund and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and Dynamic Opportunity 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 Dynamic Opportunity Fund are associated (or correlated) with Catalystmillburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Dynamic Opportunity i.e., Dynamic Opportunity and Catalystmillburn go up and down completely randomly.

Pair Corralation between Dynamic Opportunity and Catalystmillburn

Assuming the 90 days horizon Dynamic Opportunity Fund is expected to generate 1.22 times more return on investment than Catalystmillburn. However, Dynamic Opportunity is 1.22 times more volatile than Catalystmillburn Hedge Strategy. It trades about 0.17 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.14 per unit of risk. If you would invest  1,429  in Dynamic Opportunity Fund on May 4, 2025 and sell it today you would earn a total of  108.00  from holding Dynamic Opportunity Fund or generate 7.56% return on investment over 90 days.

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

Dynamic Opportunity Fund  vs.  Catalystmillburn Hedge Strateg

Dynamic Opportunity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Opportunity Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dynamic Opportunity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Catalystmillburn Hedge

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalystmillburn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dynamic Opportunity and Catalystmillburn

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

The idea behind Dynamic Opportunity Fund and Catalystmillburn Hedge Strategy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.