Correlation Between NYSE Composite and Global Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Growth 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 Global Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Global Growth Fund, you can compare the effects of market volatilities on NYSE Composite and Global Growth 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 Global Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Growth.
Diversification Opportunities for NYSE Composite and Global Growth
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Global is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Growth 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 Global Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Growth
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Global Growth. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.61 times less risky than Global Growth. The index trades about -0.04 of its potential returns per unit of risk. The Global Growth Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,316 in Global Growth Fund on September 13, 2024 and sell it today you would lose (5.00) from holding Global Growth Fund or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Global Growth Fund
Performance |
| Timeline |
NYSE Composite and Global Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Growth Fund
Pair trading matchups for Global Growth
Pair Trading with NYSE Composite and Global Growth
The main advantage of trading using opposite NYSE Composite and Global Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Growth 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 Global Growth will offset losses from the drop in Global Growth's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Global Growth vs. Angel Oak Financial | Global Growth vs. Goldman Sachs Financial | Global Growth vs. John Hancock Financial | Global Growth vs. Gabelli Global Financial |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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