Correlation Between NYSE Composite and BNTY
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and BNTY 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 BNTY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BNTY, you can compare the effects of market volatilities on NYSE Composite and BNTY 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 BNTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BNTY.
Diversification Opportunities for NYSE Composite and BNTY
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and BNTY is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BNTY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNTY 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 BNTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNTY has no effect on the direction of NYSE Composite i.e., NYSE Composite and BNTY go up and down completely randomly.
Pair Corralation between NYSE Composite and BNTY
Assuming the 90 days trading horizon NYSE Composite is expected to generate 24.09 times less return on investment than BNTY. But when comparing it to its historical volatility, NYSE Composite is 42.5 times less risky than BNTY. It trades about 0.08 of its potential returns per unit of risk. BNTY is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.05 in BNTY on August 27, 2024 and sell it today you would lose (0.03) from holding BNTY or give up 58.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.28% |
| Values | Daily Returns |
NYSE Composite vs. BNTY
Performance |
| Timeline |
NYSE Composite and BNTY Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BNTY
Pair trading matchups for BNTY
Pair Trading with NYSE Composite and BNTY
The main advantage of trading using opposite NYSE Composite and BNTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, BNTY 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 BNTY will offset losses from the drop in BNTY's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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