Correlation Between NYSE Composite and Eco Tek
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Eco Tek 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 Eco Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Eco Tek Group, you can compare the effects of market volatilities on NYSE Composite and Eco Tek 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 Eco Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Eco Tek.
Diversification Opportunities for NYSE Composite and Eco Tek
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Eco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Eco Tek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Tek Group 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 Eco Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Tek Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Eco Tek go up and down completely randomly.
Pair Corralation between NYSE Composite and Eco Tek
Assuming the 90 days trading horizon NYSE Composite is expected to generate 23.19 times less return on investment than Eco Tek. But when comparing it to its historical volatility, NYSE Composite is 35.35 times less risky than Eco Tek. It trades about 0.16 of its potential returns per unit of risk. Eco Tek Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Eco Tek Group on September 1, 2024 and sell it today you would lose (0.01) from holding Eco Tek Group or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Eco Tek Group
Performance |
| Timeline |
NYSE Composite and Eco Tek Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Eco Tek Group
Pair trading matchups for Eco Tek
Pair Trading with NYSE Composite and Eco Tek
The main advantage of trading using opposite NYSE Composite and Eco Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Eco Tek 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 Eco Tek will offset losses from the drop in Eco Tek's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Eco Tek vs. South32 Limited | Eco Tek vs. NioCorp Developments Ltd | Eco Tek vs. HUMANA INC | Eco Tek vs. SCOR PK |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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