Correlation Between NYSE Composite and Utilities Portfolio
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Utilities Portfolio 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 Utilities Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Utilities Portfolio Utilities, you can compare the effects of market volatilities on NYSE Composite and Utilities Portfolio 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 Utilities Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Utilities Portfolio.
Diversification Opportunities for NYSE Composite and Utilities Portfolio
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Utilities is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio 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 Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of NYSE Composite i.e., NYSE Composite and Utilities Portfolio go up and down completely randomly.
Pair Corralation between NYSE Composite and Utilities Portfolio
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.51 times more return on investment than Utilities Portfolio. However, NYSE Composite is 1.97 times less risky than Utilities Portfolio. It trades about 0.19 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.05 per unit of risk. If you would invest 1,956,073 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 56,272 from holding NYSE Composite or generate 2.88% 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. Utilities Portfolio Utilities
Performance |
| Timeline |
NYSE Composite and Utilities Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Utilities Portfolio Utilities
Pair trading matchups for Utilities Portfolio
Pair Trading with NYSE Composite and Utilities Portfolio
The main advantage of trading using opposite NYSE Composite and Utilities Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Utilities Portfolio 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 Utilities Portfolio will offset losses from the drop in Utilities Portfolio's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |