Correlation Between NYSE Composite and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Prudential 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 Prudential 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 Prudential Emerging Markets, you can compare the effects of market volatilities on NYSE Composite and Prudential 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 Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Prudential Emerging.
Diversification Opportunities for NYSE Composite and Prudential Emerging
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Prudential is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential 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 Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of NYSE Composite i.e., NYSE Composite and Prudential Emerging go up and down completely randomly.
Pair Corralation between NYSE Composite and Prudential Emerging
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.61 times more return on investment than Prudential Emerging. However, NYSE Composite is 1.61 times more volatile than Prudential Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,539,994 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 481,951 from holding NYSE Composite or generate 31.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Prudential Emerging Markets
Performance |
| Timeline |
NYSE Composite and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Prudential Emerging Markets
Pair trading matchups for Prudential Emerging
Pair Trading with NYSE Composite and Prudential Emerging
The main advantage of trading using opposite NYSE Composite and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Prudential 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 Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Prudential Emerging vs. Sterling Capital Short | Prudential Emerging vs. Quantitative Longshort Equity | Prudential Emerging vs. Rbc Ultra Short Fixed | Prudential Emerging vs. Ab Select Longshort |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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