Correlation Between NYSE Composite and Core Fixed
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Core Fixed 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 Core Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Core Fixed Income, you can compare the effects of market volatilities on NYSE Composite and Core Fixed 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 Core Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Core Fixed.
Diversification Opportunities for NYSE Composite and Core Fixed
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Core is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Core Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Fixed Income 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 Core Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Fixed Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Core Fixed go up and down completely randomly.
Pair Corralation between NYSE Composite and Core Fixed
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.74 times more return on investment than Core Fixed. However, NYSE Composite is 1.74 times more volatile than Core Fixed Income. It trades about 0.08 of its potential returns per unit of risk. Core Fixed Income is currently generating about 0.02 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.74% |
| Values | Daily Returns |
NYSE Composite vs. Core Fixed Income
Performance |
| Timeline |
NYSE Composite and Core Fixed Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Core Fixed Income
Pair trading matchups for Core Fixed
Pair Trading with NYSE Composite and Core Fixed
The main advantage of trading using opposite NYSE Composite and Core Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Core Fixed 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 Core Fixed will offset losses from the drop in Core Fixed's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Core Fixed vs. International Portfolio International | Core Fixed vs. Strategic Equity Portfolio | Core Fixed vs. Large Cap E | Core Fixed vs. Small Cap Equity |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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