Correlation Between Catholic Values and Stet Intermediate

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

By analyzing existing cross correlation between Catholic Values Fixed and Stet Intermediate Term, you can compare the effects of market volatilities on Catholic Values and Stet Intermediate 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 Catholic Values with a short position of Stet Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catholic Values and Stet Intermediate.

Diversification Opportunities for Catholic Values and Stet Intermediate

0.73

Correlation Coefficient

Catholic Values  Stet Intermediate

Poor diversification

The 3 months correlation between Catholic and Stet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Catholic Values Fixed and Stet Intermediate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Intermediate Term and Catholic Values 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 Catholic Values Fixed are associated (or correlated) with Stet Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Intermediate Term has no effect on the direction of Catholic Values i.e., Catholic Values and Stet Intermediate go up and down completely randomly.

Pair Corralation between Catholic Values and Stet Intermediate

Assuming the 90 days horizon Catholic Values is expected to generate 1.09 times less return on investment than Stet Intermediate. In addition to that, Catholic Values is 2.35 times more volatile than Stet Intermediate Term. It trades about 0.03 of its total potential returns per unit of risk. Stet Intermediate Term is currently generating about 0.08 per unit of volatility. If you would invest  1,032  in Stet Intermediate Term on September 18, 2024 and sell it today you would earn a total of  82.00  from holding Stet Intermediate Term or generate 7.95% return on investment over 90 days.

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

Catholic Values Fixed  vs.  Stet Intermediate Term

Catholic Values Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catholic Values Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Catholic Values is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stet Intermediate Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stet Intermediate Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Stet Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catholic Values and Stet Intermediate

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

The idea behind Catholic Values Fixed and Stet Intermediate Term 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.