Correlation Between NYSE Composite and Hyundai
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Hyundai 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 Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Hyundai Motor Co, you can compare the effects of market volatilities on NYSE Composite and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Hyundai.
Diversification Opportunities for NYSE Composite and Hyundai
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Hyundai is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of NYSE Composite i.e., NYSE Composite and Hyundai go up and down completely randomly.
Pair Corralation between NYSE Composite and Hyundai
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.48 times more return on investment than Hyundai. However, NYSE Composite is 2.08 times less risky than Hyundai. It trades about 0.24 of its potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.24 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Hyundai Motor Co
Performance |
| Timeline |
NYSE Composite and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Hyundai Motor Co
Pair trading matchups for Hyundai
Pair Trading with NYSE Composite and Hyundai
The main advantage of trading using opposite NYSE Composite and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Hyundai vs. Isuzu Motors | Hyundai vs. Renault SA | Hyundai vs. Toyota Motor Corp | Hyundai vs. Porsche Automobile Holding |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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