Correlation Between NYSE Composite and GPOW
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and GPOW 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 GPOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and GPOW, you can compare the effects of market volatilities on NYSE Composite and GPOW 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 GPOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and GPOW.
Diversification Opportunities for NYSE Composite and GPOW
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and GPOW is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and GPOW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPOW 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 GPOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPOW has no effect on the direction of NYSE Composite i.e., NYSE Composite and GPOW go up and down completely randomly.
Pair Corralation between NYSE Composite and GPOW
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.88 times less return on investment than GPOW. But when comparing it to its historical volatility, NYSE Composite is 1.21 times less risky than GPOW. It trades about 0.14 of its potential returns per unit of risk. GPOW is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,548 in GPOW on September 1, 2024 and sell it today you would earn a total of 1,149 from holding GPOW or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. GPOW
Performance |
| Timeline |
NYSE Composite and GPOW Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
GPOW
Pair trading matchups for GPOW
Pair Trading with NYSE Composite and GPOW
The main advantage of trading using opposite NYSE Composite and GPOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, GPOW 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 GPOW will offset losses from the drop in GPOW's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| GPOW vs. First Trust Exchange Traded | GPOW vs. Ultimus Managers Trust | GPOW vs. Horizon Kinetics Medical | GPOW vs. Harbor Health Care |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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