Correlation Between NYSE Composite and IShares Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares Energy 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 IShares Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares Energy Storage, you can compare the effects of market volatilities on NYSE Composite and IShares Energy 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 IShares Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares Energy.
Diversification Opportunities for NYSE Composite and IShares Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage 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 IShares Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.53 times more return on investment than IShares Energy. However, NYSE Composite is 1.88 times less risky than IShares Energy. It trades about 0.14 of its potential returns per unit of risk. iShares Energy Storage is currently generating about -0.01 per unit of risk. If you would invest 1,800,696 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 220,286 from holding NYSE Composite or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. iShares Energy Storage
Performance |
| Timeline |
NYSE Composite and IShares Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares Energy Storage
Pair trading matchups for IShares Energy
Pair Trading with NYSE Composite and IShares Energy
The main advantage of trading using opposite NYSE Composite and IShares Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares Energy 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 IShares Energy will offset losses from the drop in IShares Energy's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| IShares Energy vs. Freedom Day Dividend | IShares Energy vs. Franklin Templeton ETF | IShares Energy vs. iShares MSCI China | IShares Energy vs. Tidal Trust II |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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