Correlation Between NYSE Composite and Amalgamated Bank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Amalgamated Bank 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 Amalgamated Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Amalgamated Bank, you can compare the effects of market volatilities on NYSE Composite and Amalgamated Bank 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 Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Amalgamated Bank.
Diversification Opportunities for NYSE Composite and Amalgamated Bank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Amalgamated is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank 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 Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and Amalgamated Bank go up and down completely randomly.
Pair Corralation between NYSE Composite and Amalgamated Bank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.04 times less return on investment than Amalgamated Bank. But when comparing it to its historical volatility, NYSE Composite is 3.26 times less risky than Amalgamated Bank. It trades about 0.12 of its potential returns per unit of risk. Amalgamated Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Amalgamated Bank on August 25, 2024 and sell it today you would earn a total of 1,001 from holding Amalgamated Bank or generate 37.77% 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. Amalgamated Bank
Performance |
| Timeline |
NYSE Composite and Amalgamated Bank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Amalgamated Bank
Pair trading matchups for Amalgamated Bank
Pair Trading with NYSE Composite and Amalgamated Bank
The main advantage of trading using opposite NYSE Composite and Amalgamated Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Amalgamated Bank 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 Amalgamated Bank will offset losses from the drop in Amalgamated Bank's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Amalgamated Bank vs. Home Bancorp | Amalgamated Bank vs. Community West Bancshares | Amalgamated Bank vs. First Community | Amalgamated Bank vs. Great Southern Bancorp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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