Correlation Between NYSE Composite and Flying Nickel
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Flying Nickel 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 Flying Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Flying Nickel Mining, you can compare the effects of market volatilities on NYSE Composite and Flying Nickel 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 Flying Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Flying Nickel.
Diversification Opportunities for NYSE Composite and Flying Nickel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Flying is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Flying Nickel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flying Nickel Mining 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 Flying Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flying Nickel Mining has no effect on the direction of NYSE Composite i.e., NYSE Composite and Flying Nickel go up and down completely randomly.
Pair Corralation between NYSE Composite and Flying Nickel
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.06 times more return on investment than Flying Nickel. However, NYSE Composite is 16.27 times less risky than Flying Nickel. It trades about 0.28 of its potential returns per unit of risk. Flying Nickel Mining is currently generating about 0.01 per unit of risk. If you would invest 1,925,429 in NYSE Composite on November 4, 2024 and sell it today you would earn a total of 74,453 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
NYSE Composite vs. Flying Nickel Mining
Performance |
| Timeline |
NYSE Composite and Flying Nickel Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Flying Nickel Mining
Pair trading matchups for Flying Nickel
Pair Trading with NYSE Composite and Flying Nickel
The main advantage of trading using opposite NYSE Composite and Flying Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Flying Nickel 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 Flying Nickel will offset losses from the drop in Flying Nickel's long position.| NYSE Composite vs. Aris Water Solutions | NYSE Composite vs. Marfrig Global Foods | NYSE Composite vs. CenterPoint Energy | NYSE Composite vs. Sysco |
| Flying Nickel vs. Euro Manganese | Flying Nickel vs. Lithium Australia NL | Flying Nickel vs. Bushveld Minerals Limited | Flying Nickel vs. Core Assets Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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