Correlation Between NYSE Composite and Ab Select
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Ab Select 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 Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ab Select Longshort, you can compare the effects of market volatilities on NYSE Composite and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ab Select.
Diversification Opportunities for NYSE Composite and Ab Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and ASCLX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort 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 Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ab Select go up and down completely randomly.
Pair Corralation between NYSE Composite and Ab Select
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.1 times more return on investment than Ab Select. However, NYSE Composite is 1.1 times more volatile than Ab Select Longshort. It trades about 0.13 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.14 per unit of risk. If you would invest 1,959,424 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 37,406 from holding NYSE Composite or generate 1.91% 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. Ab Select Longshort
Performance |
| Timeline |
NYSE Composite and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ab Select Longshort
Pair trading matchups for Ab Select
Pair Trading with NYSE Composite and Ab Select
The main advantage of trading using opposite NYSE Composite and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| Ab Select vs. Ab Bond Inflation | Ab Select vs. Simt Multi Asset Inflation | Ab Select vs. Schwab Treasury Inflation | Ab Select vs. Siit Real Return |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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