Correlation Between NYSE Composite and Secured Options
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Secured Options 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 Secured Options into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Secured Options Portfolio, you can compare the effects of market volatilities on NYSE Composite and Secured Options 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 Secured Options. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Secured Options.
Diversification Opportunities for NYSE Composite and Secured Options
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Secured is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Secured Options Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secured Options Portfolio 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 Secured Options. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secured Options Portfolio has no effect on the direction of NYSE Composite i.e., NYSE Composite and Secured Options go up and down completely randomly.
Pair Corralation between NYSE Composite and Secured Options
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.95 times more return on investment than Secured Options. However, NYSE Composite is 2.95 times more volatile than Secured Options Portfolio. It trades about 0.12 of its potential returns per unit of risk. Secured Options Portfolio is currently generating about 0.3 per unit of risk. If you would invest 1,950,655 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 61,690 from holding NYSE Composite or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Secured Options Portfolio
Performance |
| Timeline |
NYSE Composite and Secured Options Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Secured Options Portfolio
Pair trading matchups for Secured Options
Pair Trading with NYSE Composite and Secured Options
The main advantage of trading using opposite NYSE Composite and Secured Options positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Secured Options 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 Secured Options will offset losses from the drop in Secured Options' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Secured Options vs. Equity Income Portfolio | Secured Options vs. Woman In Leadership | Secured Options vs. Responsible Esg Equity | Secured Options vs. Secured Options Portfolio |
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 CEOs Directory module to screen CEOs from public companies around the world.
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