Correlation Between Qs Defensive and Catalyst Hedged

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

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

Diversification Opportunities for Qs Defensive and Catalyst Hedged

0.35

Correlation Coefficient

Qs Defensive  Catalyst Hedged

Weak diversification

The 3 months correlation between LMLRX and Catalyst is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Qs Defensive Growth and Catalyst Hedged Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Hedged Modity and Qs Defensive 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 Qs Defensive Growth are associated (or correlated) with Catalyst Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Hedged Modity has no effect on the direction of Qs Defensive i.e., Qs Defensive and Catalyst Hedged go up and down completely randomly.

Pair Corralation between Qs Defensive and Catalyst Hedged

Assuming the 90 days horizon Qs Defensive Growth is expected to generate 0.46 times more return on investment than Catalyst Hedged. However, Qs Defensive Growth is 2.16 times less risky than Catalyst Hedged. It trades about 0.11 of its potential returns per unit of risk. Catalyst Hedged Modity is currently generating about 0.03 per unit of risk. If you would invest  1,209  in Qs Defensive Growth on September 13, 2024 and sell it today you would earn a total of  135.00  from holding Qs Defensive Growth or generate 11.17% return on investment over 90 days.

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

Qs Defensive Growth  vs.  Catalyst Hedged Modity

Qs Defensive Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Defensive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Qs Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Catalyst Hedged Modity

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Hedged Modity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Catalyst Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qs Defensive and Catalyst Hedged

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

The idea behind Qs Defensive Growth and Catalyst Hedged Modity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.