Correlation Between NYSE Composite and Henkel AG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Henkel AG 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 Henkel AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Henkel AG Co, you can compare the effects of market volatilities on NYSE Composite and Henkel AG 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 Henkel AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Henkel AG.
Diversification Opportunities for NYSE Composite and Henkel AG
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Henkel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Henkel AG Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henkel AG 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 Henkel AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henkel AG has no effect on the direction of NYSE Composite i.e., NYSE Composite and Henkel AG go up and down completely randomly.
Pair Corralation between NYSE Composite and Henkel AG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.59 times less return on investment than Henkel AG. But when comparing it to its historical volatility, NYSE Composite is 2.09 times less risky than Henkel AG. It trades about 0.06 of its potential returns per unit of risk. Henkel AG Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,650 in Henkel AG Co on September 19, 2024 and sell it today you would earn a total of 1,720 from holding Henkel AG Co or generate 25.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.59% |
| Values | Daily Returns |
NYSE Composite vs. Henkel AG Co
Performance |
| Timeline |
NYSE Composite and Henkel AG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Henkel AG Co
Pair trading matchups for Henkel AG
Pair Trading with NYSE Composite and Henkel AG
The main advantage of trading using opposite NYSE Composite and Henkel AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Henkel AG 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 Henkel AG will offset losses from the drop in Henkel AG's long position.| NYSE Composite vs. Chipotle Mexican Grill | NYSE Composite vs. Cracker Barrel Old | NYSE Composite vs. Shake Shack | NYSE Composite vs. Integral Ad Science |
| Henkel AG vs. Beiersdorf AG ADR | Henkel AG vs. Henkel AG Co | Henkel AG vs. LOreal Co ADR | Henkel AG vs. Church Dwight |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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