Correlation Between NYSE Composite and Carter Bank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Carter Bank 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 Carter Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Carter Bank and, you can compare the effects of market volatilities on NYSE Composite and Carter Bank 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 Carter Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Carter Bank.
Diversification Opportunities for NYSE Composite and Carter Bank
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Carter is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Carter Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carter Bank 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 Carter Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carter Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and Carter Bank go up and down completely randomly.
Pair Corralation between NYSE Composite and Carter Bank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.46 times more return on investment than Carter Bank. However, NYSE Composite is 2.17 times less risky than Carter Bank. It trades about -0.02 of its potential returns per unit of risk. Carter Bank and is currently generating about -0.09 per unit of risk. If you would invest 1,998,000 in NYSE Composite on November 28, 2024 and sell it today you would lose (4,715) from holding NYSE Composite or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Carter Bank and
Performance |
| Timeline |
NYSE Composite and Carter Bank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Carter Bank and
Pair trading matchups for Carter Bank
Pair Trading with NYSE Composite and Carter Bank
The main advantage of trading using opposite NYSE Composite and Carter Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Carter Bank 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 Carter Bank will offset losses from the drop in Carter Bank's long position.| NYSE Composite vs. Kenon Holdings | NYSE Composite vs. American Electric Power | NYSE Composite vs. Mesa Air Group | NYSE Composite vs. Suburban Propane Partners |
| Carter Bank vs. Home Bancorp | Carter Bank vs. Community West Bancshares | Carter Bank vs. First Community | Carter Bank vs. Great Southern 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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