Correlation Between NYSE Composite and Global Stock
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Stock 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 Global Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Global Stock Fund, you can compare the effects of market volatilities on NYSE Composite and Global Stock 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 Global Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Stock.
Diversification Opportunities for NYSE Composite and Global Stock
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Global is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Stock 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 Global Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Stock has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Stock go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Stock
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.54 times more return on investment than Global Stock. However, NYSE Composite is 1.86 times less risky than Global Stock. It trades about 0.14 of its potential returns per unit of risk. Global Stock Fund is currently generating about 0.0 per unit of risk. If you would invest 1,620,776 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 406,428 from holding NYSE Composite or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Global Stock Fund
Performance |
| Timeline |
NYSE Composite and Global Stock Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Stock Fund
Pair trading matchups for Global Stock
Pair Trading with NYSE Composite and Global Stock
The main advantage of trading using opposite NYSE Composite and Global Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Stock 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 Global Stock will offset losses from the drop in Global Stock's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Global Stock vs. Global Stock Fund | Global Stock vs. Global Stock Fund | Global Stock vs. The Hartford Equity | Global Stock vs. Boston Trust Midcap |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |