Correlation Between CATLIN GROUP and Spirent Communications

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

By analyzing existing cross correlation between CATLIN GROUP and Spirent Communications plc, you can compare the effects of market volatilities on CATLIN GROUP and Spirent Communications 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 CATLIN GROUP with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Spirent Communications.

Diversification Opportunities for CATLIN GROUP and Spirent Communications

-0.47

Correlation Coefficient

CATLIN GROUP  Spirent Communications

Very good diversification

The 3 months correlation between CATLIN and Spirent is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Spirent Communications go up and down completely randomly.

Pair Corralation between CATLIN GROUP and Spirent Communications

Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Spirent Communications. In addition to that, CATLIN GROUP is 1.28 times more volatile than Spirent Communications plc. It trades about -0.06 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about 0.32 per unit of volatility. If you would invest  17,338  in Spirent Communications plc on April 21, 2025 and sell it today you would earn a total of  2,202  from holding Spirent Communications plc or generate 12.7% return on investment over 90 days.

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

CATLIN GROUP   vs.  Spirent Communications plc

CATLIN GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Spirent Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Spirent Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CATLIN GROUP and Spirent Communications

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

The idea behind CATLIN GROUP and Spirent Communications plc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.