Correlation Between Vanguard Financials and Catalyst Insider

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

By analyzing existing cross correlation between Vanguard Financials Index and Catalyst Insider Buying, you can compare the effects of market volatilities on Vanguard Financials and Catalyst Insider 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 Vanguard Financials with a short position of Catalyst Insider. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Financials and Catalyst Insider.

Diversification Opportunities for Vanguard Financials and Catalyst Insider

0.92

Correlation Coefficient

Vanguard Financials  Catalyst Insider

Almost no diversification

The 3 months correlation between Vanguard and Catalyst is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Catalyst Insider Buying in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Buying and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Catalyst Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Buying has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Catalyst Insider go up and down completely randomly.

Pair Corralation between Vanguard Financials and Catalyst Insider

Assuming the 90 days horizon Vanguard Financials is expected to generate 2.06 times less return on investment than Catalyst Insider. But when comparing it to its historical volatility, Vanguard Financials Index is 1.14 times less risky than Catalyst Insider. It trades about 0.14 of its potential returns per unit of risk. Catalyst Insider Buying is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,102  in Catalyst Insider Buying on May 2, 2025 and sell it today you would earn a total of  338.00  from holding Catalyst Insider Buying or generate 16.08% return on investment over 90 days.

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

Vanguard Financials Index  vs.  Catalyst Insider Buying

Vanguard Financials Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Vanguard Financials may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Catalyst Insider Buying

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Buying are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Catalyst Insider showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Financials and Catalyst Insider

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

The idea behind Vanguard Financials Index and Catalyst Insider Buying 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.