Correlation Between NYSE Composite and AFC Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and AFC Energy 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 AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and AFC Energy plc, you can compare the effects of market volatilities on NYSE Composite and AFC Energy 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 AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AFC Energy.
Diversification Opportunities for NYSE Composite and AFC Energy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and AFC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc 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 AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of NYSE Composite i.e., NYSE Composite and AFC Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and AFC Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.29 times less return on investment than AFC Energy. But when comparing it to its historical volatility, NYSE Composite is 11.79 times less risky than AFC Energy. It trades about 0.3 of its potential returns per unit of risk. AFC Energy plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 11.00 in AFC Energy plc on August 31, 2024 and sell it today you would earn a total of 2.00 from holding AFC Energy plc or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. AFC Energy plc
Performance |
| Timeline |
NYSE Composite and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AFC Energy plc
Pair trading matchups for AFC Energy
Pair Trading with NYSE Composite and AFC Energy
The main advantage of trading using opposite NYSE Composite and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AFC Energy 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 AFC Energy will offset losses from the drop in AFC Energy's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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