Correlation Between NYSE Composite and Group 1
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Group 1 Automotive, you can compare the effects of market volatilities on NYSE Composite and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Group 1.
Diversification Opportunities for NYSE Composite and Group 1
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Group is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of NYSE Composite i.e., NYSE Composite and Group 1 go up and down completely randomly.
Pair Corralation between NYSE Composite and Group 1
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.26 times less return on investment than Group 1. But when comparing it to its historical volatility, NYSE Composite is 4.21 times less risky than Group 1. It trades about 0.24 of its potential returns per unit of risk. Group 1 Automotive is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 35,285 in Group 1 Automotive on August 28, 2024 and sell it today you would earn a total of 8,036 from holding Group 1 Automotive or generate 22.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Group 1 Automotive
Performance |
| Timeline |
NYSE Composite and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Group 1 Automotive
Pair trading matchups for Group 1
Pair Trading with NYSE Composite and Group 1
The main advantage of trading using opposite NYSE Composite and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |