Correlation Between NYSE Composite and SPDR STOXX
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SPDR STOXX 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 SPDR STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SPDR STOXX Europe, you can compare the effects of market volatilities on NYSE Composite and SPDR STOXX 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 SPDR STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SPDR STOXX.
Diversification Opportunities for NYSE Composite and SPDR STOXX
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and SPDR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SPDR STOXX Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR STOXX Europe 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 SPDR STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR STOXX Europe has no effect on the direction of NYSE Composite i.e., NYSE Composite and SPDR STOXX go up and down completely randomly.
Pair Corralation between NYSE Composite and SPDR STOXX
Assuming the 90 days trading horizon NYSE Composite is expected to generate 245.88 times less return on investment than SPDR STOXX. But when comparing it to its historical volatility, NYSE Composite is 332.72 times less risky than SPDR STOXX. It trades about 0.29 of its potential returns per unit of risk. SPDR STOXX Europe is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,224 in SPDR STOXX Europe on August 31, 2024 and sell it today you would earn a total of 66,876 from holding SPDR STOXX Europe or generate 1583.24% 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. SPDR STOXX Europe
Performance |
| Timeline |
NYSE Composite and SPDR STOXX Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SPDR STOXX Europe
Pair trading matchups for SPDR STOXX
Pair Trading with NYSE Composite and SPDR STOXX
The main advantage of trading using opposite NYSE Composite and SPDR STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SPDR STOXX 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 SPDR STOXX will offset losses from the drop in SPDR STOXX's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| SPDR STOXX vs. SPDR Bloomberg Barclays | SPDR STOXX vs. SPDR Kensho Future | SPDR STOXX vs. SPDR Kensho Intelligent | SPDR STOXX vs. SPDR SP Kensho |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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