Correlation Between NYSE Composite and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated 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 Federated 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 Federated Emerging Market, you can compare the effects of market volatilities on NYSE Composite and Federated 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Emerging.
Diversification Opportunities for NYSE Composite and Federated Emerging
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Federated is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Emerging go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Emerging
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.94 times more return on investment than Federated Emerging. However, NYSE Composite is 1.94 times more volatile than Federated Emerging Market. It trades about 0.08 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.1 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Federated Emerging Market
Performance |
| Timeline |
NYSE Composite and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Emerging Market
Pair trading matchups for Federated Emerging
Pair Trading with NYSE Composite and Federated Emerging
The main advantage of trading using opposite NYSE Composite and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Federated Emerging vs. Federated Mdt All | Federated Emerging vs. Federated Mdt Balanced | Federated Emerging vs. Federated Global Allocation | Federated Emerging vs. Federated Hermes 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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