Correlation Between NYSE Composite and Blue Earth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Blue Earth 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 Blue Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Blue Earth Resources, you can compare the effects of market volatilities on NYSE Composite and Blue Earth 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 Blue Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Blue Earth.
Diversification Opportunities for NYSE Composite and Blue Earth
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Blue is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Blue Earth Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Earth 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 Blue Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Earth Resources has no effect on the direction of NYSE Composite i.e., NYSE Composite and Blue Earth go up and down completely randomly.
Pair Corralation between NYSE Composite and Blue Earth
Assuming the 90 days trading horizon NYSE Composite is expected to generate 38.37 times less return on investment than Blue Earth. But when comparing it to its historical volatility, NYSE Composite is 62.68 times less risky than Blue Earth. It trades about 0.38 of its potential returns per unit of risk. Blue Earth Resources is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1.30 in Blue Earth Resources on September 4, 2024 and sell it today you would earn a total of 2.20 from holding Blue Earth Resources or generate 169.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Blue Earth Resources
Performance |
| Timeline |
NYSE Composite and Blue Earth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Blue Earth Resources
Pair trading matchups for Blue Earth
Pair Trading with NYSE Composite and Blue Earth
The main advantage of trading using opposite NYSE Composite and Blue Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Blue Earth 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 Blue Earth will offset losses from the drop in Blue Earth's long position.| NYSE Composite vs. Kite Realty Group | NYSE Composite vs. Tradeweb Markets | NYSE Composite vs. Meiwu Technology Co | NYSE Composite vs. Uber Technologies |
| Blue Earth vs. Delek Energy | Blue Earth vs. PBF Energy | Blue Earth vs. HF Sinclair Corp | Blue Earth vs. Delek Logistics Partners |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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