Correlation Between NYSE Composite and BTU Metals
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and BTU Metals 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 BTU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BTU Metals Corp, you can compare the effects of market volatilities on NYSE Composite and BTU Metals 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 BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BTU Metals.
Diversification Opportunities for NYSE Composite and BTU Metals
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and BTU is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp 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 BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and BTU Metals go up and down completely randomly.
Pair Corralation between NYSE Composite and BTU Metals
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.54 times less return on investment than BTU Metals. But when comparing it to its historical volatility, NYSE Composite is 2.32 times less risky than BTU Metals. It trades about 0.19 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.91 in BTU Metals Corp on August 25, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. BTU Metals Corp
Performance |
| Timeline |
NYSE Composite and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BTU Metals Corp
Pair trading matchups for BTU Metals
Pair Trading with NYSE Composite and BTU Metals
The main advantage of trading using opposite NYSE Composite and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| BTU Metals vs. Aurion Resources | BTU Metals vs. Liberty Gold Corp | BTU Metals vs. Rio2 Limited | BTU Metals vs. Orezone Gold Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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