Correlation Between NYSE Composite and DHCNI
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and DHCNI 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 DHCNI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and DHCNI, you can compare the effects of market volatilities on NYSE Composite and DHCNI 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 DHCNI. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and DHCNI.
Diversification Opportunities for NYSE Composite and DHCNI
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and DHCNI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and DHCNI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHCNI 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 DHCNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHCNI has no effect on the direction of NYSE Composite i.e., NYSE Composite and DHCNI go up and down completely randomly.
Pair Corralation between NYSE Composite and DHCNI
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.18 times less return on investment than DHCNI. But when comparing it to its historical volatility, NYSE Composite is 2.76 times less risky than DHCNI. It trades about 0.07 of its potential returns per unit of risk. DHCNI is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 958.00 in DHCNI on November 2, 2024 and sell it today you would earn a total of 512.00 from holding DHCNI or generate 53.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. DHCNI
Performance |
| Timeline |
NYSE Composite and DHCNI Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
DHCNI
Pair trading matchups for DHCNI
Pair Trading with NYSE Composite and DHCNI
The main advantage of trading using opposite NYSE Composite and DHCNI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, DHCNI 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 DHCNI will offset losses from the drop in DHCNI's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| DHCNI vs. Diversified Healthcare Trust | DHCNI vs. Brighthouse Financial | DHCNI vs. Office Properties Income | DHCNI vs. QVCC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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