Correlation Between NYSE Composite and International Consolidated
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and International Consolidated 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 International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and International Consolidated Airlines, you can compare the effects of market volatilities on NYSE Composite and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and International Consolidated.
Diversification Opportunities for NYSE Composite and International Consolidated
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and International is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of NYSE Composite i.e., NYSE Composite and International Consolidated go up and down completely randomly.
Pair Corralation between NYSE Composite and International Consolidated
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the International Consolidated. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 3.5 times less risky than International Consolidated. The index trades about -0.11 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 619.00 in International Consolidated Airlines on September 18, 2024 and sell it today you would earn a total of 126.00 from holding International Consolidated Airlines or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
NYSE Composite vs. International Consolidated Air
Performance |
| Timeline |
NYSE Composite and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
International Consolidated Airlines
Pair trading matchups for International Consolidated
Pair Trading with NYSE Composite and International Consolidated
The main advantage of trading using opposite NYSE Composite and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| NYSE Composite vs. Siriuspoint | NYSE Composite vs. Fomento Economico Mexicano | NYSE Composite vs. Boston Beer | NYSE Composite vs. Ambev SA ADR |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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