Correlation Between NYSE Composite and EON SE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and EON SE 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 EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and EON SE, you can compare the effects of market volatilities on NYSE Composite and EON SE 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 EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and EON SE.
Diversification Opportunities for NYSE Composite and EON SE
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NYSE and EON is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE 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 EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of NYSE Composite i.e., NYSE Composite and EON SE go up and down completely randomly.
Pair Corralation between NYSE Composite and EON SE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.83 times less return on investment than EON SE. But when comparing it to its historical volatility, NYSE Composite is 5.02 times less risky than EON SE. It trades about 0.08 of its potential returns per unit of risk. EON SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 886.00 in EON SE on September 2, 2024 and sell it today you would earn a total of 385.00 from holding EON SE or generate 43.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.81% |
| Values | Daily Returns |
NYSE Composite vs. EON SE
Performance |
| Timeline |
NYSE Composite and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
EON SE
Pair trading matchups for EON SE
Pair Trading with NYSE Composite and EON SE
The main advantage of trading using opposite NYSE Composite and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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