Correlation Between NYSE Composite and Xtrackers Emerging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Xtrackers Emerging 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 Xtrackers Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Xtrackers Emerging Markets, you can compare the effects of market volatilities on NYSE Composite and Xtrackers Emerging 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 Xtrackers Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Xtrackers Emerging.
Diversification Opportunities for NYSE Composite and Xtrackers Emerging
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Xtrackers is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Xtrackers Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Emerging 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 Xtrackers Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Emerging has no effect on the direction of NYSE Composite i.e., NYSE Composite and Xtrackers Emerging go up and down completely randomly.
Pair Corralation between NYSE Composite and Xtrackers Emerging
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.6 times more return on investment than Xtrackers Emerging. However, NYSE Composite is 1.67 times less risky than Xtrackers Emerging. It trades about 0.14 of its potential returns per unit of risk. Xtrackers Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,800,696 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 226,508 from holding NYSE Composite or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Xtrackers Emerging Markets
Performance |
| Timeline |
NYSE Composite and Xtrackers Emerging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Xtrackers Emerging Markets
Pair trading matchups for Xtrackers Emerging
Pair Trading with NYSE Composite and Xtrackers Emerging
The main advantage of trading using opposite NYSE Composite and Xtrackers Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Xtrackers Emerging 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 Xtrackers Emerging will offset losses from the drop in Xtrackers Emerging's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Xtrackers Emerging vs. Xtrackers MSCI Emerging | Xtrackers Emerging vs. FlexShares Morningstar Emerging | Xtrackers Emerging vs. First Trust Emerging |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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