Correlation Between NYSE Composite and BankUnited
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and BankUnited 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 BankUnited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BankUnited, you can compare the effects of market volatilities on NYSE Composite and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BankUnited.
Diversification Opportunities for NYSE Composite and BankUnited
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and BankUnited is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of NYSE Composite i.e., NYSE Composite and BankUnited go up and down completely randomly.
Pair Corralation between NYSE Composite and BankUnited
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.97 times less return on investment than BankUnited. But when comparing it to its historical volatility, NYSE Composite is 5.05 times less risky than BankUnited. It trades about 0.14 of its potential returns per unit of risk. BankUnited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,614 in BankUnited on August 30, 2024 and sell it today you would earn a total of 622.00 from holding BankUnited or generate 17.21% 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. BankUnited
Performance |
| Timeline |
NYSE Composite and BankUnited Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BankUnited
Pair trading matchups for BankUnited
Pair Trading with NYSE Composite and BankUnited
The main advantage of trading using opposite NYSE Composite and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| BankUnited vs. SVB T Corp | BankUnited vs. First Capital | BankUnited vs. Pioneer Bankcorp | BankUnited vs. Liberty Northwest Bancorp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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