Correlation Between NYSE Composite and First Merchants
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and First Merchants 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 First Merchants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and First Merchants, you can compare the effects of market volatilities on NYSE Composite and First Merchants 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 First Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and First Merchants.
Diversification Opportunities for NYSE Composite and First Merchants
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and First Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Merchants 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 First Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Merchants has no effect on the direction of NYSE Composite i.e., NYSE Composite and First Merchants go up and down completely randomly.
Pair Corralation between NYSE Composite and First Merchants
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.67 times more return on investment than First Merchants. However, NYSE Composite is 1.5 times less risky than First Merchants. It trades about 0.08 of its potential returns per unit of risk. First Merchants is currently generating about 0.03 per unit of risk. If you would invest 1,531,179 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 490,857 from holding NYSE Composite or generate 32.06% 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. First Merchants
Performance |
| Timeline |
NYSE Composite and First Merchants Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
First Merchants
Pair trading matchups for First Merchants
Pair Trading with NYSE Composite and First Merchants
The main advantage of trading using opposite NYSE Composite and First Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, First Merchants 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 First Merchants will offset losses from the drop in First Merchants' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| First Merchants vs. Fifth Third Bancorp | First Merchants vs. Zions Bancorporation | First Merchants vs. Huntington Bancshares Incorporated | First Merchants vs. Comerica |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |