Correlation Between NYSE Composite and Guggenheim Floating
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Guggenheim Floating 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 Guggenheim Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Guggenheim Floating Rate, you can compare the effects of market volatilities on NYSE Composite and Guggenheim Floating 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 Guggenheim Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Guggenheim Floating.
Diversification Opportunities for NYSE Composite and Guggenheim Floating
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Guggenheim is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guggenheim Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Floating Rate 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 Guggenheim Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Floating Rate has no effect on the direction of NYSE Composite i.e., NYSE Composite and Guggenheim Floating go up and down completely randomly.
Pair Corralation between NYSE Composite and Guggenheim Floating
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.83 times more return on investment than Guggenheim Floating. However, NYSE Composite is 3.83 times more volatile than Guggenheim Floating Rate. It trades about 0.11 of its potential returns per unit of risk. Guggenheim Floating Rate is currently generating about 0.21 per unit of risk. If you would invest 1,550,264 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 476,940 from holding NYSE Composite or generate 30.77% 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. Guggenheim Floating Rate
Performance |
| Timeline |
NYSE Composite and Guggenheim Floating Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Guggenheim Floating Rate
Pair trading matchups for Guggenheim Floating
Pair Trading with NYSE Composite and Guggenheim Floating
The main advantage of trading using opposite NYSE Composite and Guggenheim Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Guggenheim Floating 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 Guggenheim Floating will offset losses from the drop in Guggenheim Floating's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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