Correlation Between NYSE Composite and IShares CMBS
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares CMBS 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 IShares CMBS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares CMBS ETF, you can compare the effects of market volatilities on NYSE Composite and IShares CMBS 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 IShares CMBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares CMBS.
Diversification Opportunities for NYSE Composite and IShares CMBS
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares CMBS ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares CMBS ETF 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 IShares CMBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares CMBS ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares CMBS go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares CMBS
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.51 times more return on investment than IShares CMBS. However, NYSE Composite is 2.51 times more volatile than iShares CMBS ETF. It trades about 0.29 of its potential returns per unit of risk. iShares CMBS ETF is currently generating about 0.01 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 79,355 from holding NYSE Composite or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. iShares CMBS ETF
Performance |
| Timeline |
NYSE Composite and IShares CMBS Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares CMBS ETF
Pair trading matchups for IShares CMBS
Pair Trading with NYSE Composite and IShares CMBS
The main advantage of trading using opposite NYSE Composite and IShares CMBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares CMBS 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 IShares CMBS will offset losses from the drop in IShares CMBS's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| IShares CMBS vs. iShares Agency Bond | IShares CMBS vs. iShares GNMA Bond | IShares CMBS vs. iShares JP Morgan | IShares CMBS vs. iShares Aaa |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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