Correlation Between NYSE Composite and Jensen Global
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Jensen 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 Jensen 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 Jensen Global Quality, you can compare the effects of market volatilities on NYSE Composite and Jensen 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 Jensen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Jensen Global.
Diversification Opportunities for NYSE Composite and Jensen Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Jensen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Jensen Global Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Global Quality 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 Jensen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Global Quality has no effect on the direction of NYSE Composite i.e., NYSE Composite and Jensen Global go up and down completely randomly.
Pair Corralation between NYSE Composite and Jensen Global
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.85 times more return on investment than Jensen Global. However, NYSE Composite is 1.17 times less risky than Jensen Global. It trades about 0.13 of its potential returns per unit of risk. Jensen Global Quality is currently generating about 0.07 per unit of risk. If you would invest 1,808,369 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 212,613 from holding NYSE Composite or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Jensen Global Quality
Performance |
| Timeline |
NYSE Composite and Jensen Global Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Jensen Global Quality
Pair trading matchups for Jensen Global
Pair Trading with NYSE Composite and Jensen Global
The main advantage of trading using opposite NYSE Composite and Jensen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Jensen 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 Jensen Global will offset losses from the drop in Jensen Global's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Jensen Global vs. T Rowe Price | Jensen Global vs. T Rowe Price | Jensen Global vs. HUMANA INC | Jensen Global vs. Aquagold International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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