Correlation Between NYSE Composite and Johcm International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Johcm International 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 Johcm International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Johcm International Select, you can compare the effects of market volatilities on NYSE Composite and Johcm International 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 Johcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Johcm International.
Diversification Opportunities for NYSE Composite and Johcm International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Johcm is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Johcm International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm International 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 Johcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Johcm International go up and down completely randomly.
Pair Corralation between NYSE Composite and Johcm International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.84 times more return on investment than Johcm International. However, NYSE Composite is 1.18 times less risky than Johcm International. It trades about 0.07 of its potential returns per unit of risk. Johcm International Select is currently generating about 0.03 per unit of risk. If you would invest 1,605,225 in NYSE Composite on November 2, 2024 and sell it today you would earn a total of 411,397 from holding NYSE Composite or generate 25.63% 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. Johcm International Select
Performance |
| Timeline |
NYSE Composite and Johcm International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Johcm International Select
Pair trading matchups for Johcm International
Pair Trading with NYSE Composite and Johcm International
The main advantage of trading using opposite NYSE Composite and Johcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Johcm International 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 Johcm International will offset losses from the drop in Johcm International's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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