Correlation Between NYSE Composite and CHP
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CHP 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 CHP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CHP, you can compare the effects of market volatilities on NYSE Composite and CHP 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 CHP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CHP.
Diversification Opportunities for NYSE Composite and CHP
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and CHP is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CHP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHP 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 CHP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHP has no effect on the direction of NYSE Composite i.e., NYSE Composite and CHP go up and down completely randomly.
Pair Corralation between NYSE Composite and CHP
Assuming the 90 days trading horizon NYSE Composite is expected to generate 61.82 times less return on investment than CHP. But when comparing it to its historical volatility, NYSE Composite is 66.57 times less risky than CHP. It trades about 0.08 of its potential returns per unit of risk. CHP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.09 in CHP on November 19, 2024 and sell it today you would lose (0.09) from holding CHP or give up 97.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.49% |
| Values | Daily Returns |
NYSE Composite vs. CHP
Performance |
| Timeline |
NYSE Composite and CHP Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CHP
Pair trading matchups for CHP
Pair Trading with NYSE Composite and CHP
The main advantage of trading using opposite NYSE Composite and CHP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CHP 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 CHP will offset losses from the drop in CHP's long position.| NYSE Composite vs. Regeneron Pharmaceuticals | NYSE Composite vs. Compania Cervecerias Unidas | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Monster Beverage 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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