Correlation Between NYSE Composite and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Australian Strategic 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 Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Australian Strategic Materials, you can compare the effects of market volatilities on NYSE Composite and Australian Strategic 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 Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Australian Strategic.
Diversification Opportunities for NYSE Composite and Australian Strategic
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Australian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic 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 Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of NYSE Composite i.e., NYSE Composite and Australian Strategic go up and down completely randomly.
Pair Corralation between NYSE Composite and Australian Strategic
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.17 times more return on investment than Australian Strategic. However, NYSE Composite is 5.72 times less risky than Australian Strategic. It trades about 0.23 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.38 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Australian Strategic Materials
Performance |
| Timeline |
NYSE Composite and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Australian Strategic Materials
Pair trading matchups for Australian Strategic
Pair Trading with NYSE Composite and Australian Strategic
The main advantage of trading using opposite NYSE Composite and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Australian Strategic vs. Rockridge Resources | Australian Strategic vs. Ameriwest Lithium | Australian Strategic vs. Osisko Metals Incorporated | Australian Strategic vs. Volt Lithium Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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