Correlation Between NYSE Composite and Global Fixed
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Fixed 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 Fixed 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 Fixed Income, you can compare the effects of market volatilities on NYSE Composite and Global Fixed 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 Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Fixed.
Diversification Opportunities for NYSE Composite and Global Fixed
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed Income 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 Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Fixed go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Fixed
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.57 times more return on investment than Global Fixed. However, NYSE Composite is 3.57 times more volatile than Global Fixed Income. It trades about 0.12 of its potential returns per unit of risk. Global Fixed Income is currently generating about -0.1 per unit of risk. If you would invest 1,950,655 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 61,690 from holding NYSE Composite or generate 3.16% 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. Global Fixed Income
Performance |
| Timeline |
NYSE Composite and Global Fixed Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Fixed Income
Pair trading matchups for Global Fixed
Pair Trading with NYSE Composite and Global Fixed
The main advantage of trading using opposite NYSE Composite and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Fixed 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 Fixed will offset losses from the drop in Global Fixed's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Global Fixed vs. Emerging Markets Equity | Global Fixed vs. Global Fixed Income | Global Fixed vs. Global E Portfolio | Global Fixed vs. Global E Portfolio |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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