Correlation Between NYSE Composite and Federated Equity
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Equity 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 Federated Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federated Equity Income, you can compare the effects of market volatilities on NYSE Composite and Federated Equity 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 Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Equity.
Diversification Opportunities for NYSE Composite and Federated Equity
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Federated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income 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 Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Equity go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Equity
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.02 times more return on investment than Federated Equity. However, NYSE Composite is 1.02 times more volatile than Federated Equity Income. It trades about 0.3 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.27 per unit of risk. If you would invest 1,926,142 in NYSE Composite on November 7, 2024 and sell it today you would earn a total of 86,747 from holding NYSE Composite or generate 4.5% 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. Federated Equity Income
Performance |
| Timeline |
NYSE Composite and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Equity Income
Pair trading matchups for Federated Equity
Pair Trading with NYSE Composite and Federated Equity
The main advantage of trading using opposite NYSE Composite and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Equity 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 Federated Equity will offset losses from the drop in Federated Equity's long position.| NYSE Composite vs. BW Offshore Limited | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. NETGEAR | NYSE Composite vs. Radcom |
| Federated Equity vs. Putnam Convertible Securities | Federated Equity vs. Absolute Convertible Arbitrage | Federated Equity vs. Lord Abbett Convertible | Federated Equity vs. Virtus Convertible |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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