Correlation Between NYSE Composite and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Atlas Copco ADR, you can compare the effects of market volatilities on NYSE Composite and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Atlas Copco.
Diversification Opportunities for NYSE Composite and Atlas Copco
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Atlas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Atlas Copco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco ADR 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and Atlas Copco go up and down completely randomly.
Pair Corralation between NYSE Composite and Atlas Copco
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.75 times less return on investment than Atlas Copco. But when comparing it to its historical volatility, NYSE Composite is 2.43 times less risky than Atlas Copco. It trades about 0.08 of its potential returns per unit of risk. Atlas Copco ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Atlas Copco ADR on November 27, 2024 and sell it today you would earn a total of 481.00 from holding Atlas Copco ADR or generate 47.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Atlas Copco ADR
Performance |
| Timeline |
NYSE Composite and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Atlas Copco ADR
Pair trading matchups for Atlas Copco
Pair Trading with NYSE Composite and Atlas Copco
The main advantage of trading using opposite NYSE Composite and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Atlas Copco vs. Amaero International | Atlas Copco vs. Aumann AG | Atlas Copco vs. Atlas Copco AB | Atlas Copco vs. Alfa Laval AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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