Correlation Between NYSE Composite and Firm Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Firm Capital 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 Firm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Firm Capital Property, you can compare the effects of market volatilities on NYSE Composite and Firm Capital 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 Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Firm Capital.
Diversification Opportunities for NYSE Composite and Firm Capital
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Firm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of NYSE Composite i.e., NYSE Composite and Firm Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Firm Capital
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.71 times more return on investment than Firm Capital. However, NYSE Composite is 1.4 times less risky than Firm Capital. It trades about 0.24 of its potential returns per unit of risk. Firm Capital Property is currently generating about -0.03 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Firm Capital Property
Performance |
| Timeline |
NYSE Composite and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Firm Capital Property
Pair trading matchups for Firm Capital
Pair Trading with NYSE Composite and Firm Capital
The main advantage of trading using opposite NYSE Composite and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. Highlands REIT | Firm Capital vs. W P Carey |
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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