Correlation Between NYSE Composite and James Alpha
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and James Alpha 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 James Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and James Alpha Structured, you can compare the effects of market volatilities on NYSE Composite and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and James Alpha.
Diversification Opportunities for NYSE Composite and James Alpha
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and James is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and James Alpha Structured in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Structured 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Structured has no effect on the direction of NYSE Composite i.e., NYSE Composite and James Alpha go up and down completely randomly.
Pair Corralation between NYSE Composite and James Alpha
Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.68 times more return on investment than James Alpha. However, NYSE Composite is 5.68 times more volatile than James Alpha Structured. It trades about 0.26 of its potential returns per unit of risk. James Alpha Structured is currently generating about 0.08 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. James Alpha Structured
Performance |
| Timeline |
NYSE Composite and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
James Alpha Structured
Pair trading matchups for James Alpha
Pair Trading with NYSE Composite and James Alpha
The main advantage of trading using opposite NYSE Composite and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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