Correlation Between NYSE Composite and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Institutional 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 Institutional 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 Institutional High, you can compare the effects of market volatilities on NYSE Composite and Federated Institutional 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 Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Institutional.
Diversification Opportunities for NYSE Composite and Federated Institutional
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Federated is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional 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 Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Institutional go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Institutional
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.8 times more return on investment than Federated Institutional. However, NYSE Composite is 3.8 times more volatile than Federated Institutional High. It trades about 0.23 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.17 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 66,015 from holding NYSE Composite or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Federated Institutional High
Performance |
| Timeline |
NYSE Composite and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Institutional High
Pair trading matchups for Federated Institutional
Pair Trading with NYSE Composite and Federated Institutional
The main advantage of trading using opposite NYSE Composite and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Institutional 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 Institutional will offset losses from the drop in Federated Institutional's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Federated Institutional vs. Goldman Sachs Emerging | Federated Institutional vs. Jpmorgan High Yield | Federated Institutional vs. Jpmorgan Short Duration | Federated Institutional vs. Jpmorgan Mid Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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