Correlation Between NYSE Composite and California Resources
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and California Resources 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 California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and California Resources Corp, you can compare the effects of market volatilities on NYSE Composite and California Resources 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 California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and California Resources.
Diversification Opportunities for NYSE Composite and California Resources
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and California is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and California Resources go up and down completely randomly.
Pair Corralation between NYSE Composite and California Resources
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.53 times more return on investment than California Resources. However, NYSE Composite is 1.88 times less risky than California Resources. It trades about 0.32 of its potential returns per unit of risk. California Resources Corp is currently generating about -0.33 per unit of risk. If you would invest 1,924,074 in NYSE Composite on November 9, 2024 and sell it today you would earn a total of 91,684 from holding NYSE Composite or generate 4.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. California Resources Corp
Performance |
Timeline |
NYSE Composite and California Resources Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
California Resources Corp
Pair trading matchups for California Resources
Pair Trading with NYSE Composite and California Resources
The main advantage of trading using opposite NYSE Composite and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.NYSE Composite vs. Integrated Media Technology | NYSE Composite vs. Custom Truck One | NYSE Composite vs. Funko Inc | NYSE Composite vs. Multi Ways Holdings |
California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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