Correlation Between Catalyst Media and Broadcom

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

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

Diversification Opportunities for Catalyst Media and Broadcom

0.46

Correlation Coefficient

Catalyst Media  Broadcom

Very weak diversification

The 3 months correlation between Catalyst and Broadcom is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and Catalyst 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 Catalyst Media Group are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Catalyst Media i.e., Catalyst Media and Broadcom go up and down completely randomly.

Pair Corralation between Catalyst Media and Broadcom

Assuming the 90 days trading horizon Catalyst Media is expected to generate 1.28 times less return on investment than Broadcom. But when comparing it to its historical volatility, Catalyst Media Group is 1.53 times less risky than Broadcom. It trades about 0.06 of its potential returns per unit of risk. Broadcom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15,248  in Broadcom on September 3, 2024 and sell it today you would earn a total of  981.00  from holding Broadcom or generate 6.43% return on investment over 90 days.

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

Catalyst Media Group  vs.  Broadcom

Catalyst Media Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Broadcom

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Broadcom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalyst Media and Broadcom

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

The idea behind Catalyst Media Group and Broadcom 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.