Correlation Between NYSE Composite and Groupon
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Groupon 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 Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Groupon, you can compare the effects of market volatilities on NYSE Composite and Groupon 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 Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Groupon.
Diversification Opportunities for NYSE Composite and Groupon
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Groupon is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon 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 Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of NYSE Composite i.e., NYSE Composite and Groupon go up and down completely randomly.
Pair Corralation between NYSE Composite and Groupon
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.12 times more return on investment than Groupon. However, NYSE Composite is 8.13 times less risky than Groupon. It trades about 0.14 of its potential returns per unit of risk. Groupon is currently generating about 0.02 per unit of risk. If you would invest 1,592,915 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 403,915 from holding NYSE Composite or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Groupon
Performance |
| Timeline |
NYSE Composite and Groupon Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Groupon
Pair trading matchups for Groupon
Pair Trading with NYSE Composite and Groupon
The main advantage of trading using opposite NYSE Composite and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 Stocks Directory module to find actively traded stocks across global markets.
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