Correlation Between Catalyst Pharmaceuticals and Electrocore LLC
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals and Electrocore LLC 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 Electrocore LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Electrocore LLC, you can compare the effects of market volatilities on Catalyst Pharmaceuticals and Electrocore LLC 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 Electrocore LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Electrocore LLC.
Diversification Opportunities for Catalyst Pharmaceuticals and Electrocore LLC
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalyst and Electrocore is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC 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 Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Electrocore LLC go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and Electrocore LLC
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 0.73 times more return on investment than Electrocore LLC. However, Catalyst Pharmaceuticals is 1.37 times less risky than Electrocore LLC. It trades about -0.11 of its potential returns per unit of risk. Electrocore LLC is currently generating about -0.08 per unit of risk. If you would invest 1,574 in Catalyst Pharmaceuticals on January 29, 2024 and sell it today you would lose (85.00) from holding Catalyst Pharmaceuticals or give up 5.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Catalyst Pharmaceuticals vs. Electrocore LLC
Performance |
Timeline |
Catalyst Pharmaceuticals |
Electrocore LLC |
Catalyst Pharmaceuticals and Electrocore LLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Catalyst Pharmaceuticals and Electrocore LLC
The main advantage of trading using opposite Catalyst Pharmaceuticals and Electrocore LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals position performs unexpectedly, Electrocore LLC 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 Electrocore LLC will offset losses from the drop in Electrocore LLC's long position.Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme PharmaInc |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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