Correlation Between Pace Large and Catalystmillburn

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

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

Diversification Opportunities for Pace Large and Catalystmillburn

0.96

Correlation Coefficient

Pace Large  Catalystmillburn

Almost no diversification

The 3 months correlation between Pace and Catalystmillburn is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and Pace 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 Pace Large Growth 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 Pace Large i.e., Pace Large and Catalystmillburn go up and down completely randomly.

Pair Corralation between Pace Large and Catalystmillburn

Assuming the 90 days horizon Pace Large Growth is expected to generate 1.4 times more return on investment than Catalystmillburn. However, Pace Large is 1.4 times more volatile than Catalystmillburn Hedge Strategy. It trades about 0.26 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.25 per unit of risk. If you would invest  1,704  in Pace Large Growth on May 1, 2025 and sell it today you would earn a total of  211.00  from holding Pace Large Growth or generate 12.38% return on investment over 90 days.

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

Pace Large Growth  vs.  Catalystmillburn Hedge Strateg

Pace Large Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Large Growth are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pace Large may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Catalystmillburn may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pace Large and Catalystmillburn

The main advantage of trading using opposite Pace Large and Catalystmillburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large 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 Pace Large Growth 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.