Correlation Between NYSE Composite and CochLear
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CochLear 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 CochLear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CochLear Ltd ADR, you can compare the effects of market volatilities on NYSE Composite and CochLear 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 CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CochLear.
Diversification Opportunities for NYSE Composite and CochLear
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and CochLear is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR 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 CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and CochLear go up and down completely randomly.
Pair Corralation between NYSE Composite and CochLear
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.82 times less return on investment than CochLear. But when comparing it to its historical volatility, NYSE Composite is 2.01 times less risky than CochLear. It trades about 0.27 of its potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,333 in CochLear Ltd ADR on August 30, 2024 and sell it today you would earn a total of 656.00 from holding CochLear Ltd ADR or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. CochLear Ltd ADR
Performance |
| Timeline |
NYSE Composite and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CochLear Ltd ADR
Pair trading matchups for CochLear
Pair Trading with NYSE Composite and CochLear
The main advantage of trading using opposite NYSE Composite and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CochLear 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 CochLear will offset losses from the drop in CochLear's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
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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