Correlation Between M Large and Catalystsmh Total

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

By analyzing existing cross correlation between M Large Cap and Catalystsmh Total Return, you can compare the effects of market volatilities on M Large and Catalystsmh Total 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 M Large with a short position of Catalystsmh Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Catalystsmh Total.

Diversification Opportunities for M Large and Catalystsmh Total

0.87

Correlation Coefficient

M Large  Catalystsmh Total

Very poor diversification

The 3 months correlation between MTCGX and Catalystsmh is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Catalystsmh Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystsmh Total Return and M Large 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 M Large Cap are associated (or correlated) with Catalystsmh Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystsmh Total Return has no effect on the direction of M Large i.e., M Large and Catalystsmh Total go up and down completely randomly.

Pair Corralation between M Large and Catalystsmh Total

Assuming the 90 days horizon M Large Cap is expected to generate 1.28 times more return on investment than Catalystsmh Total. However, M Large is 1.28 times more volatile than Catalystsmh Total Return. It trades about 0.27 of its potential returns per unit of risk. Catalystsmh Total Return is currently generating about 0.22 per unit of risk. If you would invest  3,170  in M Large Cap on May 3, 2025 and sell it today you would earn a total of  519.00  from holding M Large Cap or generate 16.37% return on investment over 90 days.

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

M Large Cap  vs.  Catalystsmh Total Return

M Large Cap

Risk-Adjusted Performance

Solid

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

Catalystsmh Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystsmh Total Return are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalystsmh Total may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with M Large and Catalystsmh Total

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

The idea behind M Large Cap and Catalystsmh Total Return 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.