Correlation Between NYSE Composite and Global Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Energy 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 Global Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Global Energy Metals, you can compare the effects of market volatilities on NYSE Composite and Global Energy 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 Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Energy.
Diversification Opportunities for NYSE Composite and Global Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Global is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.07 times more return on investment than Global Energy. However, NYSE Composite is 14.43 times less risky than Global Energy. It trades about 0.09 of its potential returns per unit of risk. Global Energy Metals is currently generating about 0.0 per unit of risk. If you would invest 1,721,232 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 278,650 from holding NYSE Composite or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
NYSE Composite vs. Global Energy Metals
Performance |
| Timeline |
NYSE Composite and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Energy Metals
Pair trading matchups for Global Energy
Pair Trading with NYSE Composite and Global Energy
The main advantage of trading using opposite NYSE Composite and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Energy 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 Global Energy will offset losses from the drop in Global Energy's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| Global Energy vs. Golden Goliath Resources | Global Energy vs. Fireweed Zinc | Global Energy vs. Monitor Ventures | Global Energy vs. Lithium Australia NL |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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