Correlation Between NYSE Composite and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Consumer Staples Portfolio, you can compare the effects of market volatilities on NYSE Composite and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Consumer Staples.
Diversification Opportunities for NYSE Composite and Consumer Staples
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Consumer is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of NYSE Composite i.e., NYSE Composite and Consumer Staples go up and down completely randomly.
Pair Corralation between NYSE Composite and Consumer Staples
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.98 times more return on investment than Consumer Staples. However, NYSE Composite is 1.03 times less risky than Consumer Staples. It trades about 0.17 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.08 per unit of risk. If you would invest 1,482,589 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 529,756 from holding NYSE Composite or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
NYSE Composite vs. Consumer Staples Portfolio
Performance |
| Timeline |
NYSE Composite and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Consumer Staples Portfolio
Pair trading matchups for Consumer Staples
Pair Trading with NYSE Composite and Consumer Staples
The main advantage of trading using opposite NYSE Composite and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Consumer Staples vs. Jpmorgan High Yield | Consumer Staples vs. Artisan High Income | Consumer Staples vs. Ppm High Yield | Consumer Staples vs. Multi Manager High Yield |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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