Correlation Between NYSE Composite and Floating Rate
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Floating Rate 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 Floating Rate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Floating Rate Income, you can compare the effects of market volatilities on NYSE Composite and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Floating Rate.
Diversification Opportunities for NYSE Composite and Floating Rate
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Floating is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Floating Rate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate Income 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Floating Rate go up and down completely randomly.
Pair Corralation between NYSE Composite and Floating Rate
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.45 times more return on investment than Floating Rate. However, NYSE Composite is 4.45 times more volatile than Floating Rate Income. It trades about 0.15 of its potential returns per unit of risk. Floating Rate Income is currently generating about 0.17 per unit of risk. If you would invest 1,793,449 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 233,755 from holding NYSE Composite or generate 13.03% 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. Floating Rate Income
Performance |
| Timeline |
NYSE Composite and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Floating Rate Income
Pair trading matchups for Floating Rate
Pair Trading with NYSE Composite and Floating Rate
The main advantage of trading using opposite NYSE Composite and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Floating Rate vs. T Rowe Price | Floating Rate vs. Oppenheimer International Diversified | Floating Rate vs. Jhancock Diversified Macro | Floating Rate vs. Fidelity Advisor Diversified |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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