Correlation Between NYSE Composite and Defense And
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Defense And 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 Defense And into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Defense And Aerospace, you can compare the effects of market volatilities on NYSE Composite and Defense And 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 Defense And. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Defense And.
Diversification Opportunities for NYSE Composite and Defense And
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Defense is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Defense And Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense And Aerospace 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 Defense And. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense And Aerospace has no effect on the direction of NYSE Composite i.e., NYSE Composite and Defense And go up and down completely randomly.
Pair Corralation between NYSE Composite and Defense And
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.1 times less return on investment than Defense And. But when comparing it to its historical volatility, NYSE Composite is 1.6 times less risky than Defense And. It trades about 0.13 of its potential returns per unit of risk. Defense And Aerospace is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,772 in Defense And Aerospace on September 3, 2024 and sell it today you would earn a total of 243.00 from holding Defense And Aerospace or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Defense And Aerospace
Performance |
| Timeline |
NYSE Composite and Defense And Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Defense And Aerospace
Pair trading matchups for Defense And
Pair Trading with NYSE Composite and Defense And
The main advantage of trading using opposite NYSE Composite and Defense And positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Defense And 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 Defense And will offset losses from the drop in Defense And's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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