Correlation Between NYSE Composite and Converge Technology
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Converge Technology 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 Converge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Converge Technology Solutions, you can compare the effects of market volatilities on NYSE Composite and Converge Technology 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 Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Converge Technology.
Diversification Opportunities for NYSE Composite and Converge Technology
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Converge is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology 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 Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of NYSE Composite i.e., NYSE Composite and Converge Technology go up and down completely randomly.
Pair Corralation between NYSE Composite and Converge Technology
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.2 times more return on investment than Converge Technology. However, NYSE Composite is 5.03 times less risky than Converge Technology. It trades about 0.14 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.01 per unit of risk. If you would invest 1,613,685 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 413,519 from holding NYSE Composite or generate 25.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Converge Technology Solutions
Performance |
| Timeline |
NYSE Composite and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Converge Technology Solutions
Pair trading matchups for Converge Technology
Pair Trading with NYSE Composite and Converge Technology
The main advantage of trading using opposite NYSE Composite and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Converge Technology vs. The Travelers Companies | Converge Technology vs. Walt Disney | Converge Technology vs. Home Depot | Converge Technology vs. Procter Gamble |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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