Correlation Between NYSE Composite and Bell Copper
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Bell Copper 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 Bell Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Bell Copper, you can compare the effects of market volatilities on NYSE Composite and Bell Copper 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 Bell Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Bell Copper.
Diversification Opportunities for NYSE Composite and Bell Copper
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Bell is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper 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 Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of NYSE Composite i.e., NYSE Composite and Bell Copper go up and down completely randomly.
Pair Corralation between NYSE Composite and Bell Copper
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.32 times less return on investment than Bell Copper. But when comparing it to its historical volatility, NYSE Composite is 18.31 times less risky than Bell Copper. It trades about 0.16 of its potential returns per unit of risk. Bell Copper is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.30 in Bell Copper on September 1, 2024 and sell it today you would lose (4.30) from holding Bell Copper or give up 58.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Bell Copper
Performance |
| Timeline |
NYSE Composite and Bell Copper Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Bell Copper
Pair trading matchups for Bell Copper
Pair Trading with NYSE Composite and Bell Copper
The main advantage of trading using opposite NYSE Composite and Bell Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Bell Copper 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 Bell Copper will offset losses from the drop in Bell Copper's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Bell Copper vs. South32 Limited | Bell Copper vs. NioCorp Developments Ltd | Bell Copper vs. HUMANA INC | Bell Copper vs. SCOR PK |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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