Correlation Between NYSE Composite and FFEM
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and FFEM 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 FFEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and FFEM, you can compare the effects of market volatilities on NYSE Composite and FFEM 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 FFEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and FFEM.
Diversification Opportunities for NYSE Composite and FFEM
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and FFEM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and FFEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFEM 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 FFEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFEM has no effect on the direction of NYSE Composite i.e., NYSE Composite and FFEM go up and down completely randomly.
Pair Corralation between NYSE Composite and FFEM
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.89 times more return on investment than FFEM. However, NYSE Composite is 1.89 times more volatile than FFEM. It trades about 0.09 of its potential returns per unit of risk. FFEM is currently generating about 0.11 per unit of risk. If you would invest 1,626,371 in NYSE Composite on September 12, 2024 and sell it today you would earn a total of 361,819 from holding NYSE Composite or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
NYSE Composite vs. FFEM
Performance |
| Timeline |
NYSE Composite and FFEM Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
FFEM
Pair trading matchups for FFEM
Pair Trading with NYSE Composite and FFEM
The main advantage of trading using opposite NYSE Composite and FFEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, FFEM 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 FFEM will offset losses from the drop in FFEM's long position.| NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
| FFEM vs. Freedom Day Dividend | FFEM vs. Franklin Templeton ETF | FFEM vs. iShares MSCI China | FFEM vs. Tidal Trust II |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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