Correlation Between NYSE Composite and AION
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and AION 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 AION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and AION, you can compare the effects of market volatilities on NYSE Composite and AION 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 AION. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AION.
Diversification Opportunities for NYSE Composite and AION
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and AION is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AION 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 AION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AION has no effect on the direction of NYSE Composite i.e., NYSE Composite and AION go up and down completely randomly.
Pair Corralation between NYSE Composite and AION
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the AION. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 83.92 times less risky than AION. The index trades about -0.01 of its potential returns per unit of risk. The AION is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.07 in AION on November 29, 2024 and sell it today you would lose (0.01) from holding AION or give up 18.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. AION
Performance |
| Timeline |
NYSE Composite and AION Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AION
Pair trading matchups for AION
Pair Trading with NYSE Composite and AION
The main advantage of trading using opposite NYSE Composite and AION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AION 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 AION will offset losses from the drop in AION's long position.| NYSE Composite vs. Kenon Holdings | NYSE Composite vs. American Electric Power | NYSE Composite vs. Mesa Air Group | NYSE Composite vs. Suburban Propane Partners |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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