Correlation Between NYSE Composite and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ECB Bancorp 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 ECB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ECB Bancorp, you can compare the effects of market volatilities on NYSE Composite and ECB Bancorp 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 ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ECB Bancorp.
Diversification Opportunities for NYSE Composite and ECB Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and ECB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB Bancorp 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of NYSE Composite i.e., NYSE Composite and ECB Bancorp go up and down completely randomly.
Pair Corralation between NYSE Composite and ECB Bancorp
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.67 times less return on investment than ECB Bancorp. But when comparing it to its historical volatility, NYSE Composite is 2.23 times less risky than ECB Bancorp. It trades about 0.14 of its potential returns per unit of risk. ECB Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,357 in ECB Bancorp on August 29, 2024 and sell it today you would earn a total of 122.00 from holding ECB Bancorp or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ECB Bancorp
Performance |
| Timeline |
NYSE Composite and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ECB Bancorp
Pair trading matchups for ECB Bancorp
Pair Trading with NYSE Composite and ECB Bancorp
The main advantage of trading using opposite NYSE Composite and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ECB Bancorp 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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