Correlation Between NYSE Composite and Causeway International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Causeway International 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 Causeway International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Causeway International Small, you can compare the effects of market volatilities on NYSE Composite and Causeway International 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 Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Causeway International.
Diversification Opportunities for NYSE Composite and Causeway International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Causeway is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Causeway International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International 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 Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Causeway International go up and down completely randomly.
Pair Corralation between NYSE Composite and Causeway International
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Causeway International. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.26 times less risky than Causeway International. The index trades about -0.02 of its potential returns per unit of risk. The Causeway International Small is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,349 in Causeway International Small on November 28, 2024 and sell it today you would earn a total of 51.00 from holding Causeway International Small or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Causeway International Small
Performance |
| Timeline |
NYSE Composite and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Causeway International Small
Pair trading matchups for Causeway International
Pair Trading with NYSE Composite and Causeway International
The main advantage of trading using opposite NYSE Composite and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
| Causeway International vs. Touchstone Small Cap | Causeway International vs. Legg Mason Partners | Causeway International vs. Ep Emerging Markets | Causeway International vs. Nuveen Small Cap |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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