Correlation Between NYSE Composite and ESE Entertainment
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ESE Entertainment 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 ESE Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ESE Entertainment, you can compare the effects of market volatilities on NYSE Composite and ESE Entertainment 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 ESE Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ESE Entertainment.
Diversification Opportunities for NYSE Composite and ESE Entertainment
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and ESE is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ESE Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESE Entertainment 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 ESE Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESE Entertainment has no effect on the direction of NYSE Composite i.e., NYSE Composite and ESE Entertainment go up and down completely randomly.
Pair Corralation between NYSE Composite and ESE Entertainment
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.1 times more return on investment than ESE Entertainment. However, NYSE Composite is 10.46 times less risky than ESE Entertainment. It trades about 0.43 of its potential returns per unit of risk. ESE Entertainment is currently generating about -0.13 per unit of risk. If you would invest 1,924,339 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 102,865 from holding NYSE Composite or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ESE Entertainment
Performance |
| Timeline |
NYSE Composite and ESE Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ESE Entertainment
Pair trading matchups for ESE Entertainment
Pair Trading with NYSE Composite and ESE Entertainment
The main advantage of trading using opposite NYSE Composite and ESE Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ESE Entertainment 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 ESE Entertainment will offset losses from the drop in ESE Entertainment's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| ESE Entertainment vs. New Wave Holdings | ESE Entertainment vs. ZoomerMedia Limited | ESE Entertainment vs. OverActive Media Corp | ESE Entertainment vs. Network Media Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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