Correlation Between NYSE Composite and Eros Resources
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Eros Resources 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 Eros Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Eros Resources Corp, you can compare the effects of market volatilities on NYSE Composite and Eros Resources 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 Eros Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Eros Resources.
Diversification Opportunities for NYSE Composite and Eros Resources
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Eros is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp 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 Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Eros Resources go up and down completely randomly.
Pair Corralation between NYSE Composite and Eros Resources
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.98 times less return on investment than Eros Resources. But when comparing it to its historical volatility, NYSE Composite is 8.63 times less risky than Eros Resources. It trades about 0.08 of its potential returns per unit of risk. Eros Resources Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Eros Resources Corp on August 26, 2024 and sell it today you would earn a total of 0.50 from holding Eros Resources Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Eros Resources Corp
Performance |
| Timeline |
NYSE Composite and Eros Resources Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Eros Resources Corp
Pair trading matchups for Eros Resources
Pair Trading with NYSE Composite and Eros Resources
The main advantage of trading using opposite NYSE Composite and Eros Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Eros Resources 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 Eros Resources will offset losses from the drop in Eros Resources' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Eros Resources vs. Norra Metals Corp | Eros Resources vs. ZincX Resources Corp | Eros Resources vs. Nuinsco Resources Limited | Eros Resources vs. South Star Battery |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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