Correlation Between NYSE Composite and American Acquisition
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and American Acquisition 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 American Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and American Acquisition Opportunity, you can compare the effects of market volatilities on NYSE Composite and American Acquisition 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 American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and American Acquisition.
Diversification Opportunities for NYSE Composite and American Acquisition
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition 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 American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of NYSE Composite i.e., NYSE Composite and American Acquisition go up and down completely randomly.
Pair Corralation between NYSE Composite and American Acquisition
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.27 times more return on investment than American Acquisition. However, NYSE Composite is 1.27 times more volatile than American Acquisition Opportunity. It trades about 0.08 of its potential returns per unit of risk. American Acquisition Opportunity is currently generating about 0.09 per unit of risk. If you would invest 1,518,228 in NYSE Composite on September 5, 2024 and sell it today you would earn a total of 500,353 from holding NYSE Composite or generate 32.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 30.51% |
| Values | Daily Returns |
NYSE Composite vs. American Acquisition Opportuni
Performance |
| Timeline |
NYSE Composite and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
American Acquisition Opportunity
Pair trading matchups for American Acquisition
Pair Trading with NYSE Composite and American Acquisition
The main advantage of trading using opposite NYSE Composite and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, American Acquisition 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 American Acquisition will offset losses from the drop in American Acquisition's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Playtika Holding Corp | NYSE Composite vs. PepsiCo | NYSE Composite vs. NETGEAR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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