Correlation Between Catena Media and Target Corp
Can any of the company-specific risk be diversified away by investing in both Catena Media and Target Corp 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 Catena Media and Target Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena Media PLC and Target Corp, you can compare the effects of market volatilities on Catena Media and Target Corp 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 Catena Media with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena Media and Target Corp.
Diversification Opportunities for Catena Media and Target Corp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Catena and Target is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Catena Media 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 Catena Media PLC are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Catena Media i.e., Catena Media and Target Corp go up and down completely randomly.
Pair Corralation between Catena Media and Target Corp
Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Target Corp. In addition to that, Catena Media is 1.23 times more volatile than Target Corp. It trades about -0.19 of its total potential returns per unit of risk. Target Corp is currently generating about -0.05 per unit of volatility. If you would invest 15,054 in Target Corp on September 5, 2024 and sell it today you would lose (1,978) from holding Target Corp or give up 13.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Catena Media PLC vs. Target Corp
Performance |
Timeline |
Catena Media PLC |
Target Corp |
Catena Media and Target Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Catena Media and Target Corp
The main advantage of trading using opposite Catena Media and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.Catena Media vs. Batm Advanced Communications | Catena Media vs. Federal Realty Investment | Catena Media vs. National Beverage Corp | Catena Media vs. Hansa Investment |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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