Correlation Between NYSE Composite and Henderson European
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Henderson European 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 Henderson European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Henderson European Focus, you can compare the effects of market volatilities on NYSE Composite and Henderson European 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 Henderson European. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Henderson European.
Diversification Opportunities for NYSE Composite and Henderson European
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Henderson is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Henderson European Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson European Focus 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 Henderson European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson European Focus has no effect on the direction of NYSE Composite i.e., NYSE Composite and Henderson European go up and down completely randomly.
Pair Corralation between NYSE Composite and Henderson European
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.69 times more return on investment than Henderson European. However, NYSE Composite is 1.44 times less risky than Henderson European. It trades about 0.14 of its potential returns per unit of risk. Henderson European Focus is currently generating about -0.05 per unit of risk. If you would invest 1,800,696 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 226,508 from holding NYSE Composite or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. Henderson European Focus
Performance |
| Timeline |
NYSE Composite and Henderson European Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Henderson European Focus
Pair trading matchups for Henderson European
Pair Trading with NYSE Composite and Henderson European
The main advantage of trading using opposite NYSE Composite and Henderson European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Henderson European 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 Henderson European will offset losses from the drop in Henderson European's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Henderson European vs. Henderson European Focus | Henderson European vs. Invesco European Small | Henderson European vs. Henderson Global Equity | Henderson European vs. Oppenheimer Developing Markets |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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