Correlation Between NYSE Composite and AES
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and AES 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 AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The AES, you can compare the effects of market volatilities on NYSE Composite and AES 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 AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AES.
Diversification Opportunities for NYSE Composite and AES
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and AES is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES 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 AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of NYSE Composite i.e., NYSE Composite and AES go up and down completely randomly.
Pair Corralation between NYSE Composite and AES
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than AES. However, NYSE Composite is 3.56 times less risky than AES. It trades about 0.11 of its potential returns per unit of risk. The AES is currently generating about -0.03 per unit of risk. If you would invest 1,550,264 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 476,940 from holding NYSE Composite or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. The AES
Performance |
| Timeline |
NYSE Composite and AES Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The AES
Pair trading matchups for AES
Pair Trading with NYSE Composite and AES
The main advantage of trading using opposite NYSE Composite and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |