Correlation Between Chartwell Small and Catalyst/millburn

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

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

Diversification Opportunities for Chartwell Small and Catalyst/millburn

0.9

Correlation Coefficient

Chartwell Small  Catalyst/millburn

Almost no diversification

The 3 months correlation between Chartwell and Catalyst/millburn is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Small Cap and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and Chartwell Small 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 Chartwell Small Cap are associated (or correlated) with Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Chartwell Small i.e., Chartwell Small and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Chartwell Small and Catalyst/millburn

Assuming the 90 days horizon Chartwell Small Cap is expected to generate 2.75 times more return on investment than Catalyst/millburn. However, Chartwell Small is 2.75 times more volatile than Catalystmillburn Hedge Strategy. It trades about 0.17 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.26 per unit of risk. If you would invest  2,030  in Chartwell Small Cap on September 4, 2024 and sell it today you would earn a total of  276.00  from holding Chartwell Small Cap or generate 13.6% return on investment over 90 days.

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

Chartwell Small Cap  vs.  Catalystmillburn Hedge Strateg

Chartwell Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Chartwell Small showed solid returns over the last few months and may actually be approaching a breakup point.

Catalystmillburn Hedge

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Catalyst/millburn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chartwell Small and Catalyst/millburn

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

The idea behind Chartwell Small Cap and Catalystmillburn Hedge 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.