Correlation Between NYSE Composite and Sleepless
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Sleepless 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 Sleepless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sleepless, you can compare the effects of market volatilities on NYSE Composite and Sleepless 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 Sleepless. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sleepless.
Diversification Opportunities for NYSE Composite and Sleepless
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Sleepless is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sleepless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleepless 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 Sleepless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleepless has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sleepless go up and down completely randomly.
Pair Corralation between NYSE Composite and Sleepless
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.53 times less return on investment than Sleepless. But when comparing it to its historical volatility, NYSE Composite is 11.02 times less risky than Sleepless. It trades about 0.12 of its potential returns per unit of risk. Sleepless is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Sleepless on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Sleepless or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
NYSE Composite vs. Sleepless
Performance |
| Timeline |
NYSE Composite and Sleepless Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sleepless
Pair trading matchups for Sleepless
Pair Trading with NYSE Composite and Sleepless
The main advantage of trading using opposite NYSE Composite and Sleepless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Sleepless 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 Sleepless will offset losses from the drop in Sleepless' long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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