Correlation Between Catalyst/millburn and Catalystmap Global

Can any of the company-specific risk be diversified away by investing in both Catalyst/millburn and Catalystmap Global 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 Catalystmap Global 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 Catalystmap Global Equity, you can compare the effects of market volatilities on Catalyst/millburn and Catalystmap Global 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 Catalystmap Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/millburn and Catalystmap Global.

Diversification Opportunities for Catalyst/millburn and Catalystmap Global

0.96

Correlation Coefficient

Catalyst/millburn  Catalystmap Global

Almost no diversification

The 3 months correlation between Catalyst/millburn and Catalystmap is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Catalystmap Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmap Global Equity 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 Catalystmap Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmap Global Equity has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Catalystmap Global go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Catalystmap Global

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 1.21 times more return on investment than Catalystmap Global. However, Catalyst/millburn is 1.21 times more volatile than Catalystmap Global Equity. It trades about 0.32 of its potential returns per unit of risk. Catalystmap Global Equity is currently generating about 0.38 per unit of risk. If you would invest  3,495  in Catalystmillburn Hedge Strategy on April 21, 2025 and sell it today you would earn a total of  457.00  from holding Catalystmillburn Hedge Strategy or generate 13.08% 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.  Catalystmap Global Equity

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.

Catalystmap Global Equity

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmap Global Equity are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Catalystmap Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Catalyst/millburn and Catalystmap Global

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

The idea behind Catalystmillburn Hedge Strategy and Catalystmap Global Equity 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.