Correlation Between NYSE Composite and Anchor Risk
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Anchor Risk 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 Anchor Risk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Anchor Risk Managed, you can compare the effects of market volatilities on NYSE Composite and Anchor Risk 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 Anchor Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Anchor Risk.
Diversification Opportunities for NYSE Composite and Anchor Risk
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Anchor is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Anchor Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anchor Risk Managed 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 Anchor Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anchor Risk Managed has no effect on the direction of NYSE Composite i.e., NYSE Composite and Anchor Risk go up and down completely randomly.
Pair Corralation between NYSE Composite and Anchor Risk
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.71 times more return on investment than Anchor Risk. However, NYSE Composite is 1.71 times more volatile than Anchor Risk Managed. It trades about 0.08 of its potential returns per unit of risk. Anchor Risk Managed is currently generating about 0.03 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% 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. Anchor Risk Managed
Performance |
| Timeline |
NYSE Composite and Anchor Risk Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Anchor Risk Managed
Pair trading matchups for Anchor Risk
Pair Trading with NYSE Composite and Anchor Risk
The main advantage of trading using opposite NYSE Composite and Anchor Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Anchor Risk 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 Anchor Risk will offset losses from the drop in Anchor Risk's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Anchor Risk vs. Anchor Risk Managed | Anchor Risk vs. Anchor Tactical Credit | Anchor Risk vs. Anchor Tactical Equity |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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