Correlation Between NYSE Composite and Autoliv
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Autoliv 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 Autoliv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Autoliv, you can compare the effects of market volatilities on NYSE Composite and Autoliv 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 Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Autoliv.
Diversification Opportunities for NYSE Composite and Autoliv
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Autoliv is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv 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 Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of NYSE Composite i.e., NYSE Composite and Autoliv go up and down completely randomly.
Pair Corralation between NYSE Composite and Autoliv
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.01 times less return on investment than Autoliv. But when comparing it to its historical volatility, NYSE Composite is 2.46 times less risky than Autoliv. It trades about 0.08 of its potential returns per unit of risk. Autoliv is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,022 in Autoliv on August 27, 2024 and sell it today you would earn a total of 1,867 from holding Autoliv or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Autoliv
Performance |
| Timeline |
NYSE Composite and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Autoliv
Pair trading matchups for Autoliv
Pair Trading with NYSE Composite and Autoliv
The main advantage of trading using opposite NYSE Composite and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Autoliv 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 Autoliv will offset losses from the drop in Autoliv's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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