Correlation Between NYSE Composite and Ames National
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Ames National 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 Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ames National, you can compare the effects of market volatilities on NYSE Composite and Ames National 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 Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ames National.
Diversification Opportunities for NYSE Composite and Ames National
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Ames is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National 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 Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ames National go up and down completely randomly.
Pair Corralation between NYSE Composite and Ames National
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than Ames National. However, NYSE Composite is 3.56 times less risky than Ames National. It trades about 0.24 of its potential returns per unit of risk. Ames National is currently generating about 0.06 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Ames National
Performance |
| Timeline |
NYSE Composite and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ames National
Pair trading matchups for Ames National
Pair Trading with NYSE Composite and Ames National
The main advantage of trading using opposite NYSE Composite and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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