Correlation Between Catalent and Trump Media

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

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

Diversification Opportunities for Catalent and Trump Media

0.23

Correlation Coefficient

Catalent  Trump Media

Modest diversification

The 3 months correlation between Catalent and Trump is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology and Catalent 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 Catalent are associated (or correlated) with Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of Catalent i.e., Catalent and Trump Media go up and down completely randomly.

Pair Corralation between Catalent and Trump Media

Given the investment horizon of 90 days Catalent is expected to generate 20.59 times less return on investment than Trump Media. But when comparing it to its historical volatility, Catalent is 13.4 times less risky than Trump Media. It trades about 0.13 of its potential returns per unit of risk. Trump Media Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Trump Media Technology on September 28, 2024 and sell it today you would earn a total of  2,096  from holding Trump Media Technology or generate 130.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.94%
Values	Daily Returns

Catalent  vs.  Trump Media Technology

Catalent

Risk-Adjusted Performance

0 of 100

OK

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

Trump Media Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking indicators, Trump Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalent and Trump Media

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

The idea behind Catalent and Trump Media Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..