Correlation Between NYSE Composite and CompoSecure
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CompoSecure 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 CompoSecure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CompoSecure, you can compare the effects of market volatilities on NYSE Composite and CompoSecure 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 CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CompoSecure.
Diversification Opportunities for NYSE Composite and CompoSecure
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and CompoSecure is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of NYSE Composite i.e., NYSE Composite and CompoSecure go up and down completely randomly.
Pair Corralation between NYSE Composite and CompoSecure
Assuming the 90 days trading horizon NYSE Composite is expected to generate 83.71 times less return on investment than CompoSecure. But when comparing it to its historical volatility, NYSE Composite is 98.44 times less risky than CompoSecure. It trades about 0.1 of its potential returns per unit of risk. CompoSecure is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 43.00 in CompoSecure on October 20, 2024 and sell it today you would earn a total of 378.00 from holding CompoSecure or generate 879.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.56% |
| Values | Daily Returns |
NYSE Composite vs. CompoSecure
Performance |
| Timeline |
NYSE Composite and CompoSecure Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CompoSecure
Pair trading matchups for CompoSecure
Pair Trading with NYSE Composite and CompoSecure
The main advantage of trading using opposite NYSE Composite and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CompoSecure 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 CompoSecure will offset losses from the drop in CompoSecure's long position.| NYSE Composite vs. Hawkins | NYSE Composite vs. Codexis | NYSE Composite vs. NL Industries | NYSE Composite vs. CVR Partners LP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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