Correlation Between NYSE Composite and Financial Investors
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Financial Investors 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 Financial Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Financial Investors Trust, you can compare the effects of market volatilities on NYSE Composite and Financial Investors 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 Financial Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Financial Investors.
Diversification Opportunities for NYSE Composite and Financial Investors
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Financial is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Financial Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Investors Trust 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 Financial Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Investors Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and Financial Investors go up and down completely randomly.
Pair Corralation between NYSE Composite and Financial Investors
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.76 times more return on investment than Financial Investors. However, NYSE Composite is 1.32 times less risky than Financial Investors. It trades about 0.15 of its potential returns per unit of risk. Financial Investors Trust is currently generating about 0.07 per unit of risk. If you would invest 1,507,091 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 513,891 from holding NYSE Composite or generate 34.1% 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. Financial Investors Trust
Performance |
| Timeline |
NYSE Composite and Financial Investors Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Financial Investors Trust
Pair trading matchups for Financial Investors
Pair Trading with NYSE Composite and Financial Investors
The main advantage of trading using opposite NYSE Composite and Financial Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Financial Investors 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 Financial Investors will offset losses from the drop in Financial Investors' long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Financial Investors vs. FT Vest Equity | Financial Investors vs. Zillow Group Class | Financial Investors vs. Northern Lights | Financial Investors vs. VanEck Vectors Moodys |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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