Correlation Between NYSE Composite and CLST Holdings
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CLST Holdings 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 CLST Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CLST Holdings, you can compare the effects of market volatilities on NYSE Composite and CLST Holdings 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 CLST Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CLST Holdings.
Diversification Opportunities for NYSE Composite and CLST Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and CLST is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings 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 CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of NYSE Composite i.e., NYSE Composite and CLST Holdings go up and down completely randomly.
Pair Corralation between NYSE Composite and CLST Holdings
Assuming the 90 days trading horizon NYSE Composite is expected to generate 10.16 times less return on investment than CLST Holdings. But when comparing it to its historical volatility, NYSE Composite is 15.43 times less risky than CLST Holdings. It trades about 0.24 of its potential returns per unit of risk. CLST Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2.70 in CLST Holdings on August 26, 2024 and sell it today you would earn a total of 0.80 from holding CLST Holdings or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. CLST Holdings
Performance |
| Timeline |
NYSE Composite and CLST Holdings Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CLST Holdings
Pair trading matchups for CLST Holdings
Pair Trading with NYSE Composite and CLST Holdings
The main advantage of trading using opposite NYSE Composite and CLST Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CLST Holdings 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 CLST Holdings will offset losses from the drop in CLST Holdings' long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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