Correlation Between NYSE Composite and Equity Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Equity Growth 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 Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Equity Growth Fund, you can compare the effects of market volatilities on NYSE Composite and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Equity Growth.
Diversification Opportunities for NYSE Composite and Equity Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Equity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Equity Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Equity Growth
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Equity Growth. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.2 times less risky than Equity Growth. The index trades about -0.11 of its potential returns per unit of risk. The Equity Growth Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,366 in Equity Growth Fund on September 18, 2024 and sell it today you would earn a total of 98.00 from holding Equity Growth Fund or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Equity Growth Fund
Performance |
| Timeline |
NYSE Composite and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Equity Growth Fund
Pair trading matchups for Equity Growth
Pair Trading with NYSE Composite and Equity Growth
The main advantage of trading using opposite NYSE Composite and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| NYSE Composite vs. Siriuspoint | NYSE Composite vs. Fomento Economico Mexicano | NYSE Composite vs. Boston Beer | NYSE Composite vs. Ambev SA ADR |
| Equity Growth vs. Mid Cap Value | Equity Growth vs. Income Growth Fund | Equity Growth vs. Diversified Bond Fund | Equity Growth vs. Emerging Markets Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |