Correlation Between NYSE Composite and Equity Metals
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Equity Metals 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 Equity Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Equity Metals, you can compare the effects of market volatilities on NYSE Composite and Equity Metals 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 Equity Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Equity Metals.
Diversification Opportunities for NYSE Composite and Equity Metals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Equity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Equity Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals 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 Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals has no effect on the direction of NYSE Composite i.e., NYSE Composite and Equity Metals go up and down completely randomly.
Pair Corralation between NYSE Composite and Equity Metals
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Equity Metals. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 12.2 times less risky than Equity Metals. The index trades about -0.05 of its potential returns per unit of risk. The Equity Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Equity Metals on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Equity Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Equity Metals
Performance |
| Timeline |
NYSE Composite and Equity Metals Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Equity Metals
Pair trading matchups for Equity Metals
Pair Trading with NYSE Composite and Equity Metals
The main advantage of trading using opposite NYSE Composite and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Equity Metals 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 Equity Metals will offset losses from the drop in Equity Metals' long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Equity Metals vs. Sierra Madre Gold | Equity Metals vs. Silver Wolf Exploration | Equity Metals vs. Western Alaska Minerals | Equity Metals vs. Summa Silver Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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