Correlation Between Catalyst Pharmaceuticals and Western Union

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and Western Union

-0.76

Correlation Coefficient

Catalyst Pharmaceuticals  Western Union

Pay attention - limited upside

The 3 months correlation between Catalyst and Western is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union and Catalyst Pharmaceuticals 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 Pharmaceuticals are associated (or correlated) with Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Western Union go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Western Union

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.44 times more return on investment than Western Union. However, Catalyst Pharmaceuticals is 1.44 times more volatile than Western Union Co. It trades about 0.02 of its potential returns per unit of risk. Western Union Co is currently generating about -0.04 per unit of risk. If you would invest  2,135  in Catalyst Pharmaceuticals on September 19, 2024 and sell it today you would earn a total of  30.00  from holding Catalyst Pharmaceuticals or generate 1.41% return on investment over 90 days.

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

Catalyst Pharmaceuticals  vs.  Western Union Co

Catalyst Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Western Union

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Union Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Western Union is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catalyst Pharmaceuticals and Western Union

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

The idea behind Catalyst Pharmaceuticals and Western Union Co 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.