Correlation Between NYSE Composite and Akre Focus
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Akre Focus 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 Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Akre Focus Fund, you can compare the effects of market volatilities on NYSE Composite and Akre Focus 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 Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Akre Focus.
Diversification Opportunities for NYSE Composite and Akre Focus
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Akre is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund 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 Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of NYSE Composite i.e., NYSE Composite and Akre Focus go up and down completely randomly.
Pair Corralation between NYSE Composite and Akre Focus
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Akre Focus. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.32 times less risky than Akre Focus. The index trades about -0.05 of its potential returns per unit of risk. The Akre Focus Fund is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,158 in Akre Focus Fund on November 27, 2024 and sell it today you would lose (16.00) from holding Akre Focus Fund or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Akre Focus Fund
Performance |
| Timeline |
NYSE Composite and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Akre Focus Fund
Pair trading matchups for Akre Focus
Pair Trading with NYSE Composite and Akre Focus
The main advantage of trading using opposite NYSE Composite and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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