Correlation Between NYSE Composite and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Aggressive Growth 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 Aggressive Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Aggressive Growth Allocation, you can compare the effects of market volatilities on NYSE Composite and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aggressive Growth.
Diversification Opportunities for NYSE Composite and Aggressive Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Aggressive is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aggressive Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aggressive Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Aggressive Growth
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.18 times less return on investment than Aggressive Growth. In addition to that, NYSE Composite is 1.09 times more volatile than Aggressive Growth Allocation. It trades about 0.08 of its total potential returns per unit of risk. Aggressive Growth Allocation is currently generating about 0.1 per unit of volatility. If you would invest 842.00 in Aggressive Growth Allocation on August 29, 2024 and sell it today you would earn a total of 324.00 from holding Aggressive Growth Allocation or generate 38.48% 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. Aggressive Growth Allocation
Performance |
| Timeline |
NYSE Composite and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Aggressive Growth Allocation
Pair trading matchups for Aggressive Growth
Pair Trading with NYSE Composite and Aggressive Growth
The main advantage of trading using opposite NYSE Composite and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Aggressive Growth vs. Mesirow Financial Small | Aggressive Growth vs. Prudential Jennison Financial | Aggressive Growth vs. Hennessy Large Cap | Aggressive Growth vs. Financials Ultrasector Profund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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