Correlation Between NYSE Composite and China Rare
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and China Rare 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 China Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and China Rare Earth, you can compare the effects of market volatilities on NYSE Composite and China Rare 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 China Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and China Rare.
Diversification Opportunities for NYSE Composite and China Rare
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and China Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Rare Earth 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 China Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Rare Earth has no effect on the direction of NYSE Composite i.e., NYSE Composite and China Rare go up and down completely randomly.
Pair Corralation between NYSE Composite and China Rare
Assuming the 90 days trading horizon NYSE Composite is expected to generate 37.67 times less return on investment than China Rare. But when comparing it to its historical volatility, NYSE Composite is 43.64 times less risky than China Rare. It trades about 0.13 of its potential returns per unit of risk. China Rare Earth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3.00 in China Rare Earth on August 29, 2024 and sell it today you would earn a total of 2.00 from holding China Rare Earth or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. China Rare Earth
Performance |
| Timeline |
NYSE Composite and China Rare Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
China Rare Earth
Pair trading matchups for China Rare
Pair Trading with NYSE Composite and China Rare
The main advantage of trading using opposite NYSE Composite and China Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, China Rare 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 China Rare will offset losses from the drop in China Rare's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| China Rare vs. Rockridge Resources | China Rare vs. Ameriwest Lithium | China Rare vs. Osisko Metals Incorporated | China Rare vs. Volt Lithium Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |