Correlation Between NYSE Composite and Dotdigital Group
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Dotdigital Group 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 Dotdigital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and dotdigital Group Plc, you can compare the effects of market volatilities on NYSE Composite and Dotdigital Group 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 Dotdigital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Dotdigital Group.
Diversification Opportunities for NYSE Composite and Dotdigital Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Dotdigital is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and dotdigital Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dotdigital Group Plc 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 Dotdigital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dotdigital Group Plc has no effect on the direction of NYSE Composite i.e., NYSE Composite and Dotdigital Group go up and down completely randomly.
Pair Corralation between NYSE Composite and Dotdigital Group
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.12 times less return on investment than Dotdigital Group. But when comparing it to its historical volatility, NYSE Composite is 3.99 times less risky than Dotdigital Group. It trades about 0.13 of its potential returns per unit of risk. dotdigital Group Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 101.00 in dotdigital Group Plc on September 14, 2024 and sell it today you would earn a total of 19.00 from holding dotdigital Group Plc or generate 18.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. dotdigital Group Plc
Performance |
| Timeline |
NYSE Composite and Dotdigital Group Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
dotdigital Group Plc
Pair trading matchups for Dotdigital Group
Pair Trading with NYSE Composite and Dotdigital Group
The main advantage of trading using opposite NYSE Composite and Dotdigital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Dotdigital Group 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 Dotdigital Group will offset losses from the drop in Dotdigital Group's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Dotdigital Group vs. TrackX Holdings | Dotdigital Group vs. Generative AI Solutions | Dotdigital Group vs. eGain | Dotdigital Group vs. Marin Software |
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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