Correlation Between NYSE Composite and IShares Core
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares Core 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 IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares Core Aggregate, you can compare the effects of market volatilities on NYSE Composite and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares Core.
Diversification Opportunities for NYSE Composite and IShares Core
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and IShares is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares Core Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggregate 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggregate has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares Core go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares Core
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.76 times more return on investment than IShares Core. However, NYSE Composite is 1.76 times more volatile than iShares Core Aggregate. It trades about 0.07 of its potential returns per unit of risk. iShares Core Aggregate is currently generating about 0.03 per unit of risk. If you would invest 1,576,702 in NYSE Composite on August 23, 2024 and sell it today you would earn a total of 398,211 from holding NYSE Composite or generate 25.26% 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. iShares Core Aggregate
Performance |
| Timeline |
NYSE Composite and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares Core Aggregate
Pair trading matchups for IShares Core
Pair Trading with NYSE Composite and IShares Core
The main advantage of trading using opposite NYSE Composite and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares iBoxx Investment | IShares Core vs. iShares TIPS Bond | IShares Core vs. iShares 1 3 Year |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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