Correlation Between NYSE Composite and Federated
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated 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 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 U S, you can compare the effects of market volatilities on NYSE Composite and Federated 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated.
Diversification Opportunities for NYSE Composite and Federated
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Federated is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated U S 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated U S has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.38 times more return on investment than Federated. However, NYSE Composite is 2.38 times more volatile than Federated U S. It trades about 0.08 of its potential returns per unit of risk. Federated U S is currently generating about 0.03 per unit of risk. If you would invest 1,539,994 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 480,988 from holding NYSE Composite or generate 31.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Federated U S
Performance |
| Timeline |
NYSE Composite and Federated Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated U S
Pair trading matchups for Federated
Pair Trading with NYSE Composite and Federated
The main advantage of trading using opposite NYSE Composite and Federated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated 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 will offset losses from the drop in Federated's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Federated vs. Vanguard Short Term Tax Exempt | Federated vs. HUMANA INC | Federated vs. Aquagold International | Federated vs. Barloworld Ltd ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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