Correlation Between Catalystmillburn and Equinox Campbell

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

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

Diversification Opportunities for Catalystmillburn and Equinox Campbell

0.0

Correlation Coefficient

Catalystmillburn  Equinox Campbell

Pay attention - limited upside

The 3 months correlation between Catalystmillburn and Equinox is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Equinox Campbell Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinox Campbell Strategy and Catalystmillburn 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 Catalystmillburn Hedge Strategy are associated (or correlated) with Equinox Campbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinox Campbell Strategy has no effect on the direction of Catalystmillburn i.e., Catalystmillburn and Equinox Campbell go up and down completely randomly.

Pair Corralation between Catalystmillburn and Equinox Campbell

Assuming the 90 days horizon Catalystmillburn is expected to generate 1.45 times less return on investment than Equinox Campbell. But when comparing it to its historical volatility, Catalystmillburn Hedge Strategy is 1.85 times less risky than Equinox Campbell. It trades about 0.04 of its potential returns per unit of risk. Equinox Campbell Strategy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  809.00  in Equinox Campbell Strategy on January 20, 2024 and sell it today you would earn a total of  72.00  from holding Equinox Campbell Strategy or generate 8.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	57.26%
Values	Daily Returns

Catalystmillburn Hedge Strateg  vs.  Equinox Campbell Strategy

Catalystmillburn Hedge

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 11 (%) 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 May 2024.

Equinox Campbell Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Catalystmillburn and Equinox Campbell

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

The idea behind Catalystmillburn Hedge Strategy and Equinox Campbell 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.