Correlation Between NYSE Composite and Alstom SA
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Alstom SA 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 Alstom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Alstom SA, you can compare the effects of market volatilities on NYSE Composite and Alstom SA 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 Alstom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alstom SA.
Diversification Opportunities for NYSE Composite and Alstom SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Alstom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA 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 Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of NYSE Composite i.e., NYSE Composite and Alstom SA go up and down completely randomly.
Pair Corralation between NYSE Composite and Alstom SA
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.27 times more return on investment than Alstom SA. However, NYSE Composite is 3.67 times less risky than Alstom SA. It trades about 0.36 of its potential returns per unit of risk. Alstom SA is currently generating about 0.03 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 5, 2024 and sell it today you would earn a total of 94,521 from holding NYSE Composite or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Alstom SA
Performance |
| Timeline |
NYSE Composite and Alstom SA Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Alstom SA
Pair trading matchups for Alstom SA
Pair Trading with NYSE Composite and Alstom SA
The main advantage of trading using opposite NYSE Composite and Alstom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Alstom SA 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 Alstom SA will offset losses from the drop in Alstom SA's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Playtika Holding Corp | NYSE Composite vs. PepsiCo | NYSE Composite vs. NETGEAR |
| Alstom SA vs. LB Foster | Alstom SA vs. Norfolk Southern | Alstom SA vs. Union Pacific | Alstom SA vs. Canadian Pacific Railway |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |