Correlation Between NYSE Composite and Gotham Hedged
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Gotham Hedged 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 Gotham Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Gotham Hedged E, you can compare the effects of market volatilities on NYSE Composite and Gotham Hedged 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 Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Gotham Hedged.
Diversification Opportunities for NYSE Composite and Gotham Hedged
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Gotham is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E 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 Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of NYSE Composite i.e., NYSE Composite and Gotham Hedged go up and down completely randomly.
Pair Corralation between NYSE Composite and Gotham Hedged
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.04 times less return on investment than Gotham Hedged. In addition to that, NYSE Composite is 1.18 times more volatile than Gotham Hedged E. It trades about 0.11 of its total potential returns per unit of risk. Gotham Hedged E is currently generating about 0.13 per unit of volatility. If you would invest 1,049 in Gotham Hedged E on September 2, 2024 and sell it today you would earn a total of 335.00 from holding Gotham Hedged E or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Gotham Hedged E
Performance |
| Timeline |
NYSE Composite and Gotham Hedged Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Gotham Hedged E
Pair trading matchups for Gotham Hedged
Pair Trading with NYSE Composite and Gotham Hedged
The main advantage of trading using opposite NYSE Composite and Gotham Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Gotham Hedged 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 Gotham Hedged will offset losses from the drop in Gotham Hedged's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Gotham Hedged vs. T Rowe Price | Gotham Hedged vs. T Rowe Price | Gotham Hedged vs. Qs Large Cap | Gotham Hedged vs. Legg Mason Bw |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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