Correlation Between NYSE Composite and IShares Global
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IShares Global 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 Global 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 Global Tech, you can compare the effects of market volatilities on NYSE Composite and IShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares Global.
Diversification Opportunities for NYSE Composite and IShares Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares Global Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Tech 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Tech has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares Global go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares Global
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.57 times more return on investment than IShares Global. However, NYSE Composite is 1.75 times less risky than IShares Global. It trades about 0.21 of its potential returns per unit of risk. iShares Global Tech is currently generating about 0.01 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 57,378 from holding NYSE Composite or generate 2.93% 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. iShares Global Tech
Performance |
| Timeline |
NYSE Composite and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares Global Tech
Pair trading matchups for IShares Global
Pair Trading with NYSE Composite and IShares Global
The main advantage of trading using opposite NYSE Composite and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global'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 |
| IShares Global vs. Invesco DWA Utilities | IShares Global vs. Invesco Dynamic Large | IShares Global vs. Invesco Dynamic Large | IShares Global vs. HUMANA INC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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