Correlation Between NYSE Composite and Brinks
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Brinks 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 Brinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Brinks Company, you can compare the effects of market volatilities on NYSE Composite and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Brinks.
Diversification Opportunities for NYSE Composite and Brinks
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Brinks is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of NYSE Composite i.e., NYSE Composite and Brinks go up and down completely randomly.
Pair Corralation between NYSE Composite and Brinks
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Brinks. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 2.3 times less risky than Brinks. The index trades about -0.01 of its potential returns per unit of risk. The Brinks Company is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,449 in Brinks Company on November 29, 2024 and sell it today you would earn a total of 180.00 from holding Brinks Company or generate 1.9% 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. Brinks Company
Performance |
Timeline |
NYSE Composite and Brinks Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Brinks Company
Pair trading matchups for Brinks
Pair Trading with NYSE Composite and Brinks
The main advantage of trading using opposite NYSE Composite and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.NYSE Composite vs. Kenon Holdings | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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