Correlation Between NYSE Composite and New Economy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and New Economy 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 New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and New Economy Fund, you can compare the effects of market volatilities on NYSE Composite and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and New Economy.
Diversification Opportunities for NYSE Composite and New Economy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and New is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of NYSE Composite i.e., NYSE Composite and New Economy go up and down completely randomly.
Pair Corralation between NYSE Composite and New Economy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.07 times less return on investment than New Economy. But when comparing it to its historical volatility, NYSE Composite is 1.52 times less risky than New Economy. It trades about 0.14 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,984 in New Economy Fund on August 30, 2024 and sell it today you would earn a total of 764.00 from holding New Economy Fund or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. New Economy Fund
Performance |
| Timeline |
NYSE Composite and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
New Economy Fund
Pair trading matchups for New Economy
Pair Trading with NYSE Composite and New Economy
The main advantage of trading using opposite NYSE Composite and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| New Economy vs. Income Fund Of | New Economy vs. New World Fund | New Economy vs. American Mutual Fund | New Economy vs. American Mutual 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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