Correlation Between NYSE Composite and Hawaii Municipal
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Hawaii Municipal 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 Hawaii Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Hawaii Municipal Bond, you can compare the effects of market volatilities on NYSE Composite and Hawaii Municipal 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 Hawaii Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Hawaii Municipal.
Diversification Opportunities for NYSE Composite and Hawaii Municipal
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Hawaii is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Hawaii Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaii Municipal Bond 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 Hawaii Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaii Municipal Bond has no effect on the direction of NYSE Composite i.e., NYSE Composite and Hawaii Municipal go up and down completely randomly.
Pair Corralation between NYSE Composite and Hawaii Municipal
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.49 times more return on investment than Hawaii Municipal. However, NYSE Composite is 3.49 times more volatile than Hawaii Municipal Bond. It trades about 0.17 of its potential returns per unit of risk. Hawaii Municipal Bond is currently generating about 0.05 per unit of risk. If you would invest 1,901,742 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 125,462 from holding NYSE Composite or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Hawaii Municipal Bond
Performance |
| Timeline |
NYSE Composite and Hawaii Municipal Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Hawaii Municipal Bond
Pair trading matchups for Hawaii Municipal
Pair Trading with NYSE Composite and Hawaii Municipal
The main advantage of trading using opposite NYSE Composite and Hawaii Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Hawaii Municipal 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 Hawaii Municipal will offset losses from the drop in Hawaii Municipal's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Hawaii Municipal vs. Hawaii Municipal Bond | Hawaii Municipal vs. Prudential Jennison International | Hawaii Municipal vs. Fidelity New Markets | Hawaii Municipal vs. Ohio Variable College |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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