Correlation Between NYSE Composite and Ariel International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Ariel International 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 Ariel International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ariel International Fund, you can compare the effects of market volatilities on NYSE Composite and Ariel International 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 Ariel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ariel International.
Diversification Opportunities for NYSE Composite and Ariel International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Ariel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ariel International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel International 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 Ariel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ariel International go up and down completely randomly.
Pair Corralation between NYSE Composite and Ariel International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.9 times more return on investment than Ariel International. However, NYSE Composite is 1.11 times less risky than Ariel International. It trades about 0.08 of its potential returns per unit of risk. Ariel International Fund is currently generating about 0.05 per unit of risk. If you would invest 1,542,718 in NYSE Composite on November 27, 2024 and sell it today you would earn a total of 443,202 from holding NYSE Composite or generate 28.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Ariel International Fund
Performance |
| Timeline |
NYSE Composite and Ariel International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ariel International Fund
Pair trading matchups for Ariel International
Pair Trading with NYSE Composite and Ariel International
The main advantage of trading using opposite NYSE Composite and Ariel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Ariel International 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 Ariel International will offset losses from the drop in Ariel International's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Ariel International vs. Ariel Global Fund | Ariel International vs. Ariel Focus Fund | Ariel International vs. Alger Spectra Fund | Ariel International vs. Ariel International Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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