Correlation Between NYSE Composite and Global Clean
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Clean 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 Clean 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 Clean Energy, you can compare the effects of market volatilities on NYSE Composite and Global Clean 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 Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Clean.
Diversification Opportunities for NYSE Composite and Global Clean
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy 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 Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Clean go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Clean
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.57 times less return on investment than Global Clean. But when comparing it to its historical volatility, NYSE Composite is 10.11 times less risky than Global Clean. It trades about 0.11 of its potential returns per unit of risk. Global Clean Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Global Clean Energy on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Global Clean Energy or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
NYSE Composite vs. Global Clean Energy
Performance |
| Timeline |
NYSE Composite and Global Clean Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Clean Energy
Pair trading matchups for Global Clean
Pair Trading with NYSE Composite and Global Clean
The main advantage of trading using opposite NYSE Composite and Global Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Clean 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 Clean will offset losses from the drop in Global Clean's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Global Clean vs. Edible Garden AG | Global Clean vs. Golden Agri Resources | Global Clean vs. Local Bounti Corp | Global Clean vs. Village Farms International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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