Correlation Between NYSE Composite and Capital Group
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Capital Group 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 Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Capital Group International, you can compare the effects of market volatilities on NYSE Composite and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Capital Group.
Diversification Opportunities for NYSE Composite and Capital Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Capital is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of NYSE Composite i.e., NYSE Composite and Capital Group go up and down completely randomly.
Pair Corralation between NYSE Composite and Capital Group
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.76 times more return on investment than Capital Group. However, NYSE Composite is 1.31 times less risky than Capital Group. It trades about 0.14 of its potential returns per unit of risk. Capital Group International is currently generating about -0.01 per unit of risk. If you would invest 1,800,696 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 226,508 from holding NYSE Composite or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. Capital Group International
Performance |
| Timeline |
NYSE Composite and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Capital Group International
Pair trading matchups for Capital Group
Pair Trading with NYSE Composite and Capital Group
The main advantage of trading using opposite NYSE Composite and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Capital Group vs. Invesco SP International | Capital Group vs. Invesco SP International | Capital Group vs. Invesco FTSE RAFI | Capital Group vs. Invesco SP Emerging |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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