Correlation Between NYSE Composite and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Arbitrage Fund 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 Arbitrage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The Arbitrage Fund, you can compare the effects of market volatilities on NYSE Composite and Arbitrage Fund 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 Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Arbitrage Fund.
Diversification Opportunities for NYSE Composite and Arbitrage Fund
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Arbitrage is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage 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 Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of NYSE Composite i.e., NYSE Composite and Arbitrage Fund go up and down completely randomly.
Pair Corralation between NYSE Composite and Arbitrage Fund
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.73 times more return on investment than Arbitrage Fund. However, NYSE Composite is 2.73 times more volatile than The Arbitrage Fund. It trades about 0.14 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.06 per unit of risk. If you would invest 1,951,644 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 70,301 from holding NYSE Composite or generate 3.6% 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. The Arbitrage Fund
Performance |
| Timeline |
NYSE Composite and Arbitrage Fund Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Arbitrage Fund
Pair trading matchups for Arbitrage Fund
Pair Trading with NYSE Composite and Arbitrage Fund
The main advantage of trading using opposite NYSE Composite and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Arbitrage Fund 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Arbitrage Fund vs. Energy Services Fund | Arbitrage Fund vs. Fidelity Advisor Energy | Arbitrage Fund vs. Firsthand Alternative Energy | Arbitrage Fund vs. Oil Gas Ultrasector |
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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