Correlation Between NYSE Composite and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Connecticut Light 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 Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The Connecticut Light, you can compare the effects of market volatilities on NYSE Composite and Connecticut Light 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 Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Connecticut Light.
Diversification Opportunities for NYSE Composite and Connecticut Light
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Connecticut is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light 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 Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of NYSE Composite i.e., NYSE Composite and Connecticut Light go up and down completely randomly.
Pair Corralation between NYSE Composite and Connecticut Light
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.19 times more return on investment than Connecticut Light. However, NYSE Composite is 5.13 times less risky than Connecticut Light. It trades about 0.08 of its potential returns per unit of risk. The Connecticut Light is currently generating about 0.01 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.87% |
| Values | Daily Returns |
NYSE Composite vs. The Connecticut Light
Performance |
| Timeline |
NYSE Composite and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Connecticut Light
Pair trading matchups for Connecticut Light
Pair Trading with NYSE Composite and Connecticut Light
The main advantage of trading using opposite NYSE Composite and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Connecticut Light vs. NVIDIA | Connecticut Light vs. Blacksky Technology | Connecticut Light vs. Crowdstrike Holdings | Connecticut Light vs. Cintas |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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