Correlation Between NYSE Composite and Lean Hogs
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lean Hogs 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 Lean Hogs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lean Hogs Futures, you can compare the effects of market volatilities on NYSE Composite and Lean Hogs 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 Lean Hogs. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lean Hogs.
Diversification Opportunities for NYSE Composite and Lean Hogs
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Lean is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lean Hogs Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lean Hogs Futures 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 Lean Hogs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lean Hogs Futures has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lean Hogs go up and down completely randomly.
Pair Corralation between NYSE Composite and Lean Hogs
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.74 times more return on investment than Lean Hogs. However, NYSE Composite is 1.36 times less risky than Lean Hogs. It trades about 0.33 of its potential returns per unit of risk. Lean Hogs Futures is currently generating about 0.19 per unit of risk. If you would invest 1,909,542 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 90,340 from holding NYSE Composite or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
NYSE Composite vs. Lean Hogs Futures
Performance |
| Timeline |
NYSE Composite and Lean Hogs Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lean Hogs Futures
Pair trading matchups for Lean Hogs
Pair Trading with NYSE Composite and Lean Hogs
The main advantage of trading using opposite NYSE Composite and Lean Hogs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lean Hogs 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 Lean Hogs will offset losses from the drop in Lean Hogs' long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| Lean Hogs vs. Live Cattle Futures | Lean Hogs vs. Lumber Futures | Lean Hogs vs. Natural Gas | Lean Hogs vs. Five Year Treasury Note |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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