Correlation Between NYSE Composite and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Amcap Fund 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 Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Amcap Fund Class, you can compare the effects of market volatilities on NYSE Composite and Amcap Fund 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 Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Amcap Fund.
Diversification Opportunities for NYSE Composite and Amcap Fund
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Amcap is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class 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 Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of NYSE Composite i.e., NYSE Composite and Amcap Fund go up and down completely randomly.
Pair Corralation between NYSE Composite and Amcap Fund
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.75 times more return on investment than Amcap Fund. However, NYSE Composite is 1.33 times less risky than Amcap Fund. It trades about 0.14 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.08 per unit of risk. If you would invest 1,804,550 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 216,772 from holding NYSE Composite or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Amcap Fund Class
Performance |
| Timeline |
NYSE Composite and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Amcap Fund Class
Pair trading matchups for Amcap Fund
Pair Trading with NYSE Composite and Amcap Fund
The main advantage of trading using opposite NYSE Composite and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Amcap Fund vs. Nationwide Global Equity | Amcap Fund vs. Us Strategic Equity | Amcap Fund vs. Artisan Select Equity | Amcap Fund vs. Multimedia Portfolio Multimedia |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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