Correlation Between NYSE Composite and IShares ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares ETF 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 ETF 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 ETF Trust, you can compare the effects of market volatilities on NYSE Composite and IShares ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares ETF.
Diversification Opportunities for NYSE Composite and IShares ETF
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and IShares is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ETF Trust 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 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ETF Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares ETF
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.29 times more return on investment than IShares ETF. However, NYSE Composite is 2.29 times more volatile than iShares ETF Trust. It trades about 0.43 of its potential returns per unit of risk. iShares ETF Trust is currently generating about 0.19 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 102,865 from holding NYSE Composite or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. iShares ETF Trust
Performance |
| Timeline |
NYSE Composite and IShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares ETF Trust
Pair trading matchups for IShares ETF
Pair Trading with NYSE Composite and IShares ETF
The main advantage of trading using opposite NYSE Composite and IShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares ETF 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 ETF will offset losses from the drop in IShares ETF's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| IShares ETF vs. iShares TIPS Bond | IShares ETF vs. Quadratic Interest Rate | IShares ETF vs. JPMorgan Inflation Managed | IShares ETF vs. FlexShares iBoxx 5 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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