Correlation Between NYSE Composite and Guidemark(r) Large
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Guidemark(r) Large 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 Guidemark(r) Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Guidemark Large Cap, you can compare the effects of market volatilities on NYSE Composite and Guidemark(r) Large 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 Guidemark(r) Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Guidemark(r) Large.
Diversification Opportunities for NYSE Composite and Guidemark(r) Large
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Guidemark(r) is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap 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 Guidemark(r) Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of NYSE Composite i.e., NYSE Composite and Guidemark(r) Large go up and down completely randomly.
Pair Corralation between NYSE Composite and Guidemark(r) Large
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.13 times less return on investment than Guidemark(r) Large. But when comparing it to its historical volatility, NYSE Composite is 1.33 times less risky than Guidemark(r) Large. It trades about 0.14 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,116 in Guidemark Large Cap on September 3, 2024 and sell it today you would earn a total of 420.00 from holding Guidemark Large Cap or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Guidemark Large Cap
Performance |
| Timeline |
NYSE Composite and Guidemark(r) Large Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Guidemark Large Cap
Pair trading matchups for Guidemark(r) Large
Pair Trading with NYSE Composite and Guidemark(r) Large
The main advantage of trading using opposite NYSE Composite and Guidemark(r) Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Guidemark(r) Large 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 Guidemark(r) Large will offset losses from the drop in Guidemark(r) Large's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Guidemark(r) Large vs. Tekla Healthcare Opportunities | Guidemark(r) Large vs. Live Oak Health | Guidemark(r) Large vs. Eventide Healthcare Life | Guidemark(r) Large vs. Allianzgi Health Sciences |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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