Correlation Between NYSE Composite and Imperial Oil
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Imperial 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 Imperial 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 Imperial Oil, you can compare the effects of market volatilities on NYSE Composite and Imperial 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 Imperial Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Imperial Oil.
Diversification Opportunities for NYSE Composite and Imperial Oil
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Imperial is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil 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 Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of NYSE Composite i.e., NYSE Composite and Imperial Oil go up and down completely randomly.
Pair Corralation between NYSE Composite and Imperial Oil
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.4 times more return on investment than Imperial Oil. However, NYSE Composite is 2.49 times less risky than Imperial Oil. It trades about 0.24 of its potential returns per unit of risk. Imperial Oil is currently generating about 0.05 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 27, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Imperial Oil
Performance |
| Timeline |
NYSE Composite and Imperial Oil Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Imperial Oil
Pair trading matchups for Imperial Oil
Pair Trading with NYSE Composite and Imperial Oil
The main advantage of trading using opposite NYSE Composite and Imperial Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Imperial 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 Imperial Oil will offset losses from the drop in Imperial Oil'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 |
| Imperial Oil vs. Suncor Energy | Imperial Oil vs. Ecopetrol SA ADR | Imperial Oil vs. Petroleo Brasileiro Petrobras | Imperial Oil vs. Equinor ASA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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