Correlation Between NYSE Composite and Cunningham Natural
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Cunningham Natural 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 Cunningham Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cunningham Natural Resources, you can compare the effects of market volatilities on NYSE Composite and Cunningham Natural 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 Cunningham Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cunningham Natural.
Diversification Opportunities for NYSE Composite and Cunningham Natural
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Cunningham is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Cunningham Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cunningham Natural 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 Cunningham Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cunningham Natural has no effect on the direction of NYSE Composite i.e., NYSE Composite and Cunningham Natural go up and down completely randomly.
Pair Corralation between NYSE Composite and Cunningham Natural
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.02 times less return on investment than Cunningham Natural. But when comparing it to its historical volatility, NYSE Composite is 31.3 times less risky than Cunningham Natural. It trades about 0.38 of its potential returns per unit of risk. Cunningham Natural Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2.04 in Cunningham Natural Resources on September 4, 2024 and sell it today you would lose (0.34) from holding Cunningham Natural Resources or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
NYSE Composite vs. Cunningham Natural Resources
Performance |
| Timeline |
NYSE Composite and Cunningham Natural Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cunningham Natural Resources
Pair trading matchups for Cunningham Natural
Pair Trading with NYSE Composite and Cunningham Natural
The main advantage of trading using opposite NYSE Composite and Cunningham Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Cunningham Natural 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 Cunningham Natural will offset losses from the drop in Cunningham Natural's long position.| NYSE Composite vs. Kite Realty Group | NYSE Composite vs. Tradeweb Markets | NYSE Composite vs. Meiwu Technology Co | NYSE Composite vs. Uber Technologies |
| Cunningham Natural vs. Victorias Secret Co | Cunningham Natural vs. Fomento Economico Mexicano | Cunningham Natural vs. PVH Corp | Cunningham Natural vs. Constellation Brands Class |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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