Correlation Between NYSE Composite and FKX
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and FKX 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 FKX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and FKX, you can compare the effects of market volatilities on NYSE Composite and FKX 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 FKX. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and FKX.
Diversification Opportunities for NYSE Composite and FKX
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and FKX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and FKX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FKX 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 FKX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FKX has no effect on the direction of NYSE Composite i.e., NYSE Composite and FKX go up and down completely randomly.
Pair Corralation between NYSE Composite and FKX
Assuming the 90 days trading horizon NYSE Composite is expected to generate 20.05 times less return on investment than FKX. But when comparing it to its historical volatility, NYSE Composite is 6.56 times less risky than FKX. It trades about 0.13 of its potential returns per unit of risk. FKX is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 0.06 in FKX on August 24, 2024 and sell it today you would earn a total of 0.03 from holding FKX or generate 44.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. FKX
Performance |
| Timeline |
NYSE Composite and FKX Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
FKX
Pair trading matchups for FKX
Pair Trading with NYSE Composite and FKX
The main advantage of trading using opposite NYSE Composite and FKX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, FKX 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 FKX will offset losses from the drop in FKX's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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