Correlation Between NYSE Composite and Horizon Oil
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Horizon Oil 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 Horizon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Horizon Oil Limited, you can compare the effects of market volatilities on NYSE Composite and Horizon Oil 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 Horizon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Horizon Oil.
Diversification Opportunities for NYSE Composite and Horizon Oil
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Horizon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Horizon Oil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Oil Limited 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 Horizon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Oil Limited has no effect on the direction of NYSE Composite i.e., NYSE Composite and Horizon Oil go up and down completely randomly.
Pair Corralation between NYSE Composite and Horizon Oil
Assuming the 90 days trading horizon NYSE Composite is expected to generate 11.06 times less return on investment than Horizon Oil. But when comparing it to its historical volatility, NYSE Composite is 9.62 times less risky than Horizon Oil. It trades about 0.27 of its potential returns per unit of risk. Horizon Oil Limited is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Horizon Oil Limited on October 23, 2024 and sell it today you would earn a total of 4.00 from holding Horizon Oil Limited or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
NYSE Composite vs. Horizon Oil Limited
Performance |
| Timeline |
NYSE Composite and Horizon Oil Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Horizon Oil Limited
Pair trading matchups for Horizon Oil
Pair Trading with NYSE Composite and Horizon Oil
The main advantage of trading using opposite NYSE Composite and Horizon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Horizon Oil 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 Horizon Oil will offset losses from the drop in Horizon Oil's long position.| NYSE Composite vs. IPG Photonics | NYSE Composite vs. Summit Materials | NYSE Composite vs. NetSol Technologies | NYSE Composite vs. Bill Com Holdings |
| Horizon Oil vs. Dno ASA | Horizon Oil vs. PetroShale | Horizon Oil vs. Enwell Energy plc | Horizon Oil vs. Tullow Oil plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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