Correlation Between NYSE Composite and Granite Point
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Granite Point 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 Granite Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Granite Point Mortgage, you can compare the effects of market volatilities on NYSE Composite and Granite Point 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 Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Granite Point.
Diversification Opportunities for NYSE Composite and Granite Point
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Granite is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage 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 Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of NYSE Composite i.e., NYSE Composite and Granite Point go up and down completely randomly.
Pair Corralation between NYSE Composite and Granite Point
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.65 times more return on investment than Granite Point. However, NYSE Composite is 1.54 times less risky than Granite Point. It trades about 0.11 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about 0.06 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 | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
NYSE Composite vs. Granite Point Mortgage
Performance |
| Timeline |
NYSE Composite and Granite Point Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Granite Point Mortgage
Pair trading matchups for Granite Point
Pair Trading with NYSE Composite and Granite Point
The main advantage of trading using opposite NYSE Composite and Granite Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Granite Point 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 Granite Point will offset losses from the drop in Granite Point's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Granite Point vs. Rithm Capital Corp | Granite Point vs. PennyMac Mortgage Investment | Granite Point vs. AGNC Investment Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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