Correlation Between NYSE Composite and Altra Industrial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Altra Industrial 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 Altra Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Altra Industrial Motion, you can compare the effects of market volatilities on NYSE Composite and Altra Industrial 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 Altra Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Altra Industrial.
Diversification Opportunities for NYSE Composite and Altra Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Altra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Altra Industrial Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altra Industrial Motion 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 Altra Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altra Industrial Motion has no effect on the direction of NYSE Composite i.e., NYSE Composite and Altra Industrial go up and down completely randomly.
Pair Corralation between NYSE Composite and Altra Industrial
If you would invest 1,623,282 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 398,663 from holding NYSE Composite or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.4% |
| Values | Daily Returns |
NYSE Composite vs. Altra Industrial Motion
Performance |
| Timeline |
NYSE Composite and Altra Industrial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Altra Industrial Motion
Pair trading matchups for Altra Industrial
Pair Trading with NYSE Composite and Altra Industrial
The main advantage of trading using opposite NYSE Composite and Altra Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Altra Industrial 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 Altra Industrial will offset losses from the drop in Altra Industrial's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Altra Industrial vs. Franklin Electric Co | Altra Industrial vs. Donaldson | Altra Industrial vs. John Bean Technologies | Altra Industrial vs. ITT Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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