Correlation Between NYSE Composite and Guggenheim Market
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Guggenheim Market 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 Guggenheim Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Guggenheim Market Neutral, you can compare the effects of market volatilities on NYSE Composite and Guggenheim Market 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 Guggenheim Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Guggenheim Market.
Diversification Opportunities for NYSE Composite and Guggenheim Market
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Guggenheim is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral 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 Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of NYSE Composite i.e., NYSE Composite and Guggenheim Market go up and down completely randomly.
Pair Corralation between NYSE Composite and Guggenheim Market
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.36 times more return on investment than Guggenheim Market. However, NYSE Composite is 6.36 times more volatile than Guggenheim Market Neutral. It trades about 0.23 of its potential returns per unit of risk. Guggenheim Market Neutral is currently generating about 0.24 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 66,015 from holding NYSE Composite or generate 3.38% 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. Guggenheim Market Neutral
Performance |
| Timeline |
NYSE Composite and Guggenheim Market Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Guggenheim Market Neutral
Pair trading matchups for Guggenheim Market
Pair Trading with NYSE Composite and Guggenheim Market
The main advantage of trading using opposite NYSE Composite and Guggenheim Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Guggenheim Market 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 Guggenheim Market will offset losses from the drop in Guggenheim Market's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Guggenheim Market vs. Qs Large Cap | Guggenheim Market vs. American Mutual Fund | Guggenheim Market vs. Vanguard Equity Income | Guggenheim Market vs. Fidelity Series 1000 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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