Correlation Between Smith Nephew and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Smith Nephew 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 Smith Nephew and Catalyst Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew PLC and Catalyst Media Group, you can compare the effects of market volatilities on Smith Nephew 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 Smith Nephew with a short position of Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Catalyst Media.
Diversification Opportunities for Smith Nephew and Catalyst Media
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smith and Catalyst is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew 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 Smith Nephew 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 Smith Nephew 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 Smith Nephew i.e., Smith Nephew and Catalyst Media go up and down completely randomly.
Pair Corralation between Smith Nephew and Catalyst Media
Assuming the 90 days trading horizon Smith Nephew PLC is expected to generate 1.61 times more return on investment than Catalyst Media. However, Smith Nephew is 1.61 times more volatile than Catalyst Media Group. It trades about 0.14 of its potential returns per unit of risk. Catalyst Media Group is currently generating about -0.17 per unit of risk. If you would invest 116,127 in Smith Nephew PLC on July 26, 2025 and sell it today you would earn a total of 21,573 from holding Smith Nephew PLC or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Nephew PLC vs. Catalyst Media Group
Performance |
| Timeline |
| Smith Nephew PLC |
| Catalyst Media Group |
Smith Nephew and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Catalyst Media
The main advantage of trading using opposite Smith Nephew and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew 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.| Smith Nephew vs. Endeavour Mining Corp | Smith Nephew vs. Lundin Mining Corp | Smith Nephew vs. Coeur Mining | Smith Nephew vs. Bloomsbury Publishing Plc |
| Catalyst Media vs. Fiinu PLC | Catalyst Media vs. Neo Energy Metals | Catalyst Media vs. AFC Energy plc | Catalyst Media vs. SANTANDER UK 10 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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