Correlation Between NYSE Composite and BCM Resources
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and BCM Resources 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 BCM Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BCM Resources, you can compare the effects of market volatilities on NYSE Composite and BCM Resources 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 BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BCM Resources.
Diversification Opportunities for NYSE Composite and BCM Resources
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and BCM is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BCM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources 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 BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources has no effect on the direction of NYSE Composite i.e., NYSE Composite and BCM Resources go up and down completely randomly.
Pair Corralation between NYSE Composite and BCM Resources
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.15 times less return on investment than BCM Resources. But when comparing it to its historical volatility, NYSE Composite is 15.14 times less risky than BCM Resources. It trades about 0.08 of its potential returns per unit of risk. BCM Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.06 in BCM Resources on September 3, 2024 and sell it today you would lose (4.53) from holding BCM Resources or give up 56.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. BCM Resources
Performance |
| Timeline |
NYSE Composite and BCM Resources Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BCM Resources
Pair trading matchups for BCM Resources
Pair Trading with NYSE Composite and BCM Resources
The main advantage of trading using opposite NYSE Composite and BCM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, BCM Resources 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 BCM Resources will offset losses from the drop in BCM Resources' long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| BCM Resources vs. Edison Cobalt Corp | BCM Resources vs. Champion Bear Resources | BCM Resources vs. Avarone Metals | BCM Resources vs. Adriatic Metals PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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