Correlation Between NYSE Composite and Global Hard
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Global Hard 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 Hard 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 Hard Assets, you can compare the effects of market volatilities on NYSE Composite and Global Hard 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 Hard. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Global Hard.
Diversification Opportunities for NYSE Composite and Global Hard
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Global Hard Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hard Assets 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 Hard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hard Assets has no effect on the direction of NYSE Composite i.e., NYSE Composite and Global Hard go up and down completely randomly.
Pair Corralation between NYSE Composite and Global Hard
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.64 times more return on investment than Global Hard. However, NYSE Composite is 1.56 times less risky than Global Hard. It trades about 0.08 of its potential returns per unit of risk. Global Hard Assets is currently generating about 0.0 per unit of risk. If you would invest 1,544,064 in NYSE Composite on November 27, 2024 and sell it today you would earn a total of 441,856 from holding NYSE Composite or generate 28.62% 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. Global Hard Assets
Performance |
| Timeline |
NYSE Composite and Global Hard Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Global Hard Assets
Pair trading matchups for Global Hard
Pair Trading with NYSE Composite and Global Hard
The main advantage of trading using opposite NYSE Composite and Global Hard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Global Hard 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 Hard will offset losses from the drop in Global Hard's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| Global Hard vs. Tax Managed Large Cap | Global Hard vs. Blackrock Large Cap | Global Hard vs. Vest Large Cap | Global Hard vs. Neiman Large Cap |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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