Correlation Between Energy Basic and Catalyst/map Global

Can any of the company-specific risk be diversified away by investing in both Energy Basic and Catalyst/map 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 Energy Basic and Catalyst/map Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Basic Materials and Catalystmap Global Equity, you can compare the effects of market volatilities on Energy Basic and Catalyst/map 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 Energy Basic with a short position of Catalyst/map Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Catalyst/map Global.

Diversification Opportunities for Energy Basic and Catalyst/map Global

0.89

Correlation Coefficient

Energy Basic  Catalyst/map Global

Very poor diversification

The 3 months correlation between Energy and Catalyst/map is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials 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 Energy Basic 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 Energy Basic Materials are associated (or correlated) with Catalyst/map 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 Energy Basic i.e., Energy Basic and Catalyst/map Global go up and down completely randomly.

Pair Corralation between Energy Basic and Catalyst/map Global

Assuming the 90 days horizon Energy Basic Materials is expected to generate 1.78 times more return on investment than Catalyst/map Global. However, Energy Basic is 1.78 times more volatile than Catalystmap Global Equity. It trades about 0.11 of its potential returns per unit of risk. Catalystmap Global Equity is currently generating about 0.17 per unit of risk. If you would invest  1,225  in Energy Basic Materials on May 8, 2025 and sell it today you would earn a total of  76.00  from holding Energy Basic Materials or generate 6.2% return on investment over 90 days.

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

Energy Basic Materials  vs.  Catalystmap Global Equity

Energy Basic Materials

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Basic Materials are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Energy Basic may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Catalystmap Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmap Global Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Catalyst/map Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energy Basic and Catalyst/map Global

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

The idea behind Energy Basic Materials 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.