Correlation Between NYSE Composite and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Canaf Investments 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 Canaf Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Canaf Investments, you can compare the effects of market volatilities on NYSE Composite and Canaf Investments 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 Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Canaf Investments.
Diversification Opportunities for NYSE Composite and Canaf Investments
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Canaf is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments 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 Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of NYSE Composite i.e., NYSE Composite and Canaf Investments go up and down completely randomly.
Pair Corralation between NYSE Composite and Canaf Investments
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.92 times less return on investment than Canaf Investments. But when comparing it to its historical volatility, NYSE Composite is 9.17 times less risky than Canaf Investments. It trades about 0.14 of its potential returns per unit of risk. Canaf Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7.50 in Canaf Investments on August 26, 2024 and sell it today you would earn a total of 13.50 from holding Canaf Investments or generate 180.0% 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. Canaf Investments
Performance |
| Timeline |
NYSE Composite and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Canaf Investments
Pair trading matchups for Canaf Investments
Pair Trading with NYSE Composite and Canaf Investments
The main advantage of trading using opposite NYSE Composite and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Canaf Investments vs. Corsa Coal Corp | Canaf Investments vs. Alpha Metallurgical Resources | Canaf Investments vs. Arch Resources |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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