Correlation Between NYSE Composite and Enhanced Fixed
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Enhanced Fixed 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 NYSE Composite and Enhanced Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Enhanced Fixed Income, you can compare the effects of market volatilities on NYSE Composite and Enhanced Fixed 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 NYSE Composite with a short position of Enhanced Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Enhanced Fixed.
Diversification Opportunities for NYSE Composite and Enhanced Fixed
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Enhanced is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Enhanced Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhanced Fixed Income and NYSE Composite 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 NYSE Composite are associated (or correlated) with Enhanced Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhanced Fixed Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Enhanced Fixed go up and down completely randomly.
Pair Corralation between NYSE Composite and Enhanced Fixed
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.66 times more return on investment than Enhanced Fixed. However, NYSE Composite is 1.66 times more volatile than Enhanced Fixed Income. It trades about 0.06 of its potential returns per unit of risk. Enhanced Fixed Income is currently generating about 0.03 per unit of risk. If you would invest 1,577,755 in NYSE Composite on October 11, 2024 and sell it today you would earn a total of 346,319 from holding NYSE Composite or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.18% |
| Values | Daily Returns |
NYSE Composite vs. Enhanced Fixed Income
Performance |
| Timeline |
NYSE Composite and Enhanced Fixed Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Enhanced Fixed Income
Pair trading matchups for Enhanced Fixed
Pair Trading with NYSE Composite and Enhanced Fixed
The main advantage of trading using opposite NYSE Composite and Enhanced Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Enhanced Fixed 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 Enhanced Fixed will offset losses from the drop in Enhanced Fixed's long position.| NYSE Composite vs. Femasys | NYSE Composite vs. Teradyne | NYSE Composite vs. Toro Co | NYSE Composite vs. Space Communication |
| Enhanced Fixed vs. Lord Abbett Health | Enhanced Fixed vs. Baron Health Care | Enhanced Fixed vs. Prudential Health Sciences | Enhanced Fixed vs. Putnam Global Health |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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