Correlation Between NYSE Composite and Electrocore LLC

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Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Electrocore LLC 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 Electrocore LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Electrocore LLC, you can compare the effects of market volatilities on NYSE Composite and Electrocore LLC 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 Electrocore LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Electrocore LLC.

Diversification Opportunities for NYSE Composite and Electrocore LLC

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between NYSE and Electrocore is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Electrocore LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrocore LLC 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 Electrocore LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrocore LLC has no effect on the direction of NYSE Composite i.e., NYSE Composite and Electrocore LLC go up and down completely randomly.
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Pair Corralation between NYSE Composite and Electrocore LLC

Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.66 times less return on investment than Electrocore LLC. But when comparing it to its historical volatility, NYSE Composite is 6.57 times less risky than Electrocore LLC. It trades about 0.08 of its potential returns per unit of risk. Electrocore LLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  525.00  in Electrocore LLC on August 27, 2024 and sell it today you would earn a total of  596.00  from holding Electrocore LLC or generate 113.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NYSE Composite  vs.  Electrocore LLC

 Performance 
       Timeline  

NYSE Composite and Electrocore LLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and Electrocore LLC

The main advantage of trading using opposite NYSE Composite and Electrocore LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Electrocore LLC 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 Electrocore LLC will offset losses from the drop in Electrocore LLC's long position.
The idea behind NYSE Composite and Electrocore LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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