Correlation Between NYSE Composite and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Daimler Truck 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 Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Daimler Truck Holding, you can compare the effects of market volatilities on NYSE Composite and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Daimler Truck.
Diversification Opportunities for NYSE Composite and Daimler Truck
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Daimler is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of NYSE Composite i.e., NYSE Composite and Daimler Truck go up and down completely randomly.
Pair Corralation between NYSE Composite and Daimler Truck
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.32 times more return on investment than Daimler Truck. However, NYSE Composite is 3.11 times less risky than Daimler Truck. It trades about 0.13 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.03 per unit of risk. If you would invest 1,688,537 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 338,667 from holding NYSE Composite or generate 20.06% 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. Daimler Truck Holding
Performance |
| Timeline |
NYSE Composite and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Daimler Truck Holding
Pair trading matchups for Daimler Truck
Pair Trading with NYSE Composite and Daimler Truck
The main advantage of trading using opposite NYSE Composite and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Daimler Truck vs. Volvo AB ADR | Daimler Truck vs. Deere Company | Daimler Truck vs. Volvo AB ser | Daimler Truck vs. Oshkosh |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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