Correlation Between NYSE Composite and BacTech Environmental
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and BacTech Environmental 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 BacTech Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BacTech Environmental, you can compare the effects of market volatilities on NYSE Composite and BacTech Environmental 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 BacTech Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BacTech Environmental.
Diversification Opportunities for NYSE Composite and BacTech Environmental
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and BacTech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental 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 BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of NYSE Composite i.e., NYSE Composite and BacTech Environmental go up and down completely randomly.
Pair Corralation between NYSE Composite and BacTech Environmental
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.09 times more return on investment than BacTech Environmental. However, NYSE Composite is 11.21 times less risky than BacTech Environmental. It trades about 0.12 of its potential returns per unit of risk. BacTech Environmental is currently generating about -0.03 per unit of risk. If you would invest 1,685,289 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 327,056 from holding NYSE Composite or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. BacTech Environmental
Performance |
| Timeline |
NYSE Composite and BacTech Environmental Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BacTech Environmental
Pair trading matchups for BacTech Environmental
Pair Trading with NYSE Composite and BacTech Environmental
The main advantage of trading using opposite NYSE Composite and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, BacTech Environmental 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 BacTech Environmental will offset losses from the drop in BacTech Environmental'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 |
| BacTech Environmental vs. BluMetric Environmental | BacTech Environmental vs. Agilyx AS | BacTech Environmental vs. EcoPlus | BacTech Environmental vs. BQE Water |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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