Correlation Between NYSE Composite and Basic-Fit
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Basic-Fit 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 Basic-Fit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Basic Fit NV, you can compare the effects of market volatilities on NYSE Composite and Basic-Fit 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 Basic-Fit. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Basic-Fit.
Diversification Opportunities for NYSE Composite and Basic-Fit
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Basic-Fit is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit NV 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 Basic-Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of NYSE Composite i.e., NYSE Composite and Basic-Fit go up and down completely randomly.
Pair Corralation between NYSE Composite and Basic-Fit
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.26 times more return on investment than Basic-Fit. However, NYSE Composite is 3.78 times less risky than Basic-Fit. It trades about 0.11 of its potential returns per unit of risk. Basic Fit NV is currently generating about -0.05 per unit of risk. If you would invest 1,583,553 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 438,483 from holding NYSE Composite or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
NYSE Composite vs. Basic Fit NV
Performance |
| Timeline |
NYSE Composite and Basic-Fit Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Basic Fit NV
Pair trading matchups for Basic-Fit
Pair Trading with NYSE Composite and Basic-Fit
The main advantage of trading using opposite NYSE Composite and Basic-Fit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Basic-Fit 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 Basic-Fit will offset losses from the drop in Basic-Fit's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Basic-Fit vs. Clarus Corp | Basic-Fit vs. Escalade Incorporated | Basic-Fit vs. Canlan Ice Sports | Basic-Fit vs. Johnson Outdoors |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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