Correlation Between NYSE Composite and EKO
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and EKO 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 EKO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and EKO, you can compare the effects of market volatilities on NYSE Composite and EKO 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 EKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and EKO.
Diversification Opportunities for NYSE Composite and EKO
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and EKO is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and EKO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EKO 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 EKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EKO has no effect on the direction of NYSE Composite i.e., NYSE Composite and EKO go up and down completely randomly.
Pair Corralation between NYSE Composite and EKO
Assuming the 90 days trading horizon NYSE Composite is expected to generate 252.85 times less return on investment than EKO. But when comparing it to its historical volatility, NYSE Composite is 306.06 times less risky than EKO. It trades about 0.26 of its potential returns per unit of risk. EKO is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 0.00 in EKO on August 30, 2024 and sell it today you would earn a total of 0.00 from holding EKO or generate 42.86% 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. EKO
Performance |
| Timeline |
NYSE Composite and EKO Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
EKO
Pair trading matchups for EKO
Pair Trading with NYSE Composite and EKO
The main advantage of trading using opposite NYSE Composite and EKO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, EKO 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 EKO will offset losses from the drop in EKO's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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