Correlation Between NYSE Composite and ETRACS 2x
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ETRACS 2x 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 ETRACS 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ETRACS 2x Leveraged, you can compare the effects of market volatilities on NYSE Composite and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ETRACS 2x.
Diversification Opportunities for NYSE Composite and ETRACS 2x
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and ETRACS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of NYSE Composite i.e., NYSE Composite and ETRACS 2x go up and down completely randomly.
Pair Corralation between NYSE Composite and ETRACS 2x
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.8 times less return on investment than ETRACS 2x. But when comparing it to its historical volatility, NYSE Composite is 3.09 times less risky than ETRACS 2x. It trades about 0.08 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,763 in ETRACS 2x Leveraged on August 30, 2024 and sell it today you would earn a total of 2,943 from holding ETRACS 2x Leveraged or generate 166.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ETRACS 2x Leveraged
Performance |
| Timeline |
NYSE Composite and ETRACS 2x Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ETRACS 2x Leveraged
Pair trading matchups for ETRACS 2x
Pair Trading with NYSE Composite and ETRACS 2x
The main advantage of trading using opposite NYSE Composite and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| ETRACS 2x vs. ABIVAX Socit Anonyme | ETRACS 2x vs. Morningstar Unconstrained Allocation | ETRACS 2x vs. SPACE | ETRACS 2x vs. Knife River |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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