Correlation Between NYSE Composite and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Aerovate Therapeutics 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 Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Aerovate Therapeutics, you can compare the effects of market volatilities on NYSE Composite and Aerovate Therapeutics 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 Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aerovate Therapeutics.
Diversification Opportunities for NYSE Composite and Aerovate Therapeutics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Aerovate is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics 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 Aerovate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovate Therapeutics has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between NYSE Composite and Aerovate Therapeutics
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.79 times less return on investment than Aerovate Therapeutics. But when comparing it to its historical volatility, NYSE Composite is 6.75 times less risky than Aerovate Therapeutics. It trades about 0.18 of its potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Aerovate Therapeutics on August 24, 2024 and sell it today you would earn a total of 46.00 from holding Aerovate Therapeutics or generate 20.91% 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. Aerovate Therapeutics
Performance |
| Timeline |
NYSE Composite and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Aerovate Therapeutics
Pair trading matchups for Aerovate Therapeutics
Pair Trading with NYSE Composite and Aerovate Therapeutics
The main advantage of trading using opposite NYSE Composite and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Aerovate Therapeutics 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 Aerovate Therapeutics will offset losses from the drop in Aerovate Therapeutics' long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Aerovate Therapeutics vs. Adagene | Aerovate Therapeutics vs. Acrivon Therapeutics, Common | Aerovate Therapeutics vs. Rezolute | Aerovate Therapeutics vs. AN2 Therapeutics |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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