Correlation Between Catalyst/millburn and Catalyst/aspect Enhanced

Can any of the company-specific risk be diversified away by investing in both Catalyst/millburn 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/millburn 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 Catalystmillburn Hedge Strategy and Catalystaspect Enhanced Multi Asset, you can compare the effects of market volatilities on Catalyst/millburn 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/millburn with a short position of Catalyst/aspect Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/millburn and Catalyst/aspect Enhanced.

Diversification Opportunities for Catalyst/millburn and Catalyst/aspect Enhanced

0.97

Correlation Coefficient

Catalyst/millburn  Catalyst/aspect Enhanced

Almost no diversification

The 3 months correlation between Catalyst/millburn and Catalyst/aspect is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg 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/millburn 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 Catalystmillburn Hedge Strategy 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/millburn i.e., Catalyst/millburn and Catalyst/aspect Enhanced go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Catalyst/aspect Enhanced

Assuming the 90 days horizon Catalyst/millburn is expected to generate 1.08 times less return on investment than Catalyst/aspect Enhanced. But when comparing it to its historical volatility, Catalystmillburn Hedge Strategy is 1.13 times less risky than Catalyst/aspect Enhanced. It trades about 0.32 of its potential returns per unit of risk. Catalystaspect Enhanced Multi Asset is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  801.00  in Catalystaspect Enhanced Multi Asset on April 21, 2025 and sell it today you would earn a total of  113.00  from holding Catalystaspect Enhanced Multi Asset or generate 14.11% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Catalystaspect Enhanced Multi

Catalystmillburn Hedge

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Catalyst/millburn may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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/millburn and Catalyst/aspect Enhanced

The main advantage of trading using opposite Catalyst/millburn and Catalyst/aspect Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst/millburn 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 Catalystmillburn Hedge Strategy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.