Correlation Between NYSE Composite and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Alfa Laval 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 Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Alfa Laval AB, you can compare the effects of market volatilities on NYSE Composite and Alfa Laval 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 Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alfa Laval.
Diversification Opportunities for NYSE Composite and Alfa Laval
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Alfa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB 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 Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of NYSE Composite i.e., NYSE Composite and Alfa Laval go up and down completely randomly.
Pair Corralation between NYSE Composite and Alfa Laval
If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Alfa Laval AB
Performance |
| Timeline |
NYSE Composite and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Alfa Laval AB
Pair trading matchups for Alfa Laval
Pair Trading with NYSE Composite and Alfa Laval
The main advantage of trading using opposite NYSE Composite and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval'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 |
| Alfa Laval vs. Aumann AG | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB | Alfa Laval vs. American Commerce Solutions |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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