Correlation Between NYSE Composite and CSP
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and CSP 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 CSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and CSP Inc, you can compare the effects of market volatilities on NYSE Composite and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and CSP.
Diversification Opportunities for NYSE Composite and CSP
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and CSP is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and CSP go up and down completely randomly.
Pair Corralation between NYSE Composite and CSP
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.6 times less return on investment than CSP. But when comparing it to its historical volatility, NYSE Composite is 8.94 times less risky than CSP. It trades about 0.29 of its potential returns per unit of risk. CSP Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,252 in CSP Inc on August 31, 2024 and sell it today you would earn a total of 330.00 from holding CSP Inc or generate 26.36% 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. CSP Inc
Performance |
| Timeline |
NYSE Composite and CSP Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
CSP Inc
Pair trading matchups for CSP
Pair Trading with NYSE Composite and CSP
The main advantage of trading using opposite NYSE Composite and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, CSP 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 CSP will offset losses from the drop in CSP's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| CSP vs. The Hackett Group | CSP vs. Nayax | CSP vs. Formula Systems 1985 | CSP vs. Information Services Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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