Correlation Between NYSE Composite and DMY Squared
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and DMY Squared 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 DMY Squared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and dMY Squared Technology, you can compare the effects of market volatilities on NYSE Composite and DMY Squared 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 DMY Squared. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and DMY Squared.
Diversification Opportunities for NYSE Composite and DMY Squared
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and DMY is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared 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 DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of NYSE Composite i.e., NYSE Composite and DMY Squared go up and down completely randomly.
Pair Corralation between NYSE Composite and DMY Squared
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.74 times more return on investment than DMY Squared. However, NYSE Composite is 1.74 times more volatile than dMY Squared Technology. It trades about 0.17 of its potential returns per unit of risk. dMY Squared Technology is currently generating about 0.02 per unit of risk. If you would invest 1,901,742 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 119,240 from holding NYSE Composite or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. dMY Squared Technology
Performance |
| Timeline |
NYSE Composite and DMY Squared Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
dMY Squared Technology
Pair trading matchups for DMY Squared
Pair Trading with NYSE Composite and DMY Squared
The main advantage of trading using opposite NYSE Composite and DMY Squared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, DMY Squared 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 DMY Squared will offset losses from the drop in DMY Squared's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| DMY Squared vs. PowerUp Acquisition Corp | DMY Squared vs. HUMANA INC | DMY Squared vs. Aquagold International | DMY Squared vs. Barloworld Ltd ADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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