Correlation Between Draper Esprit and Catalyst Media

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

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

Diversification Opportunities for Draper Esprit and Catalyst Media

0.61

Correlation Coefficient

Draper Esprit  Catalyst Media

Poor diversification

The 3 months correlation between Draper and Catalyst is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Draper Esprit PLC and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group and Draper Esprit 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 Draper Esprit PLC are associated (or correlated) with Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Draper Esprit i.e., Draper Esprit and Catalyst Media go up and down completely randomly.

Pair Corralation between Draper Esprit and Catalyst Media

Assuming the 90 days trading horizon Draper Esprit PLC is expected to generate 0.93 times more return on investment than Catalyst Media. However, Draper Esprit PLC is 1.08 times less risky than Catalyst Media. It trades about 0.19 of its potential returns per unit of risk. Catalyst Media Group is currently generating about 0.12 per unit of risk. If you would invest  26,420  in Draper Esprit PLC on April 23, 2025 and sell it today you would earn a total of  9,240  from holding Draper Esprit PLC or generate 34.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Draper Esprit PLC  vs.  Catalyst Media Group

Draper Esprit PLC

Risk-Adjusted Performance

Good

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

Catalyst Media Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Draper Esprit and Catalyst Media

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

The idea behind Draper Esprit PLC and Catalyst Media Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..