Correlation Between NYSE Composite and Regional Bank
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Regional Bank 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 Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Regional Bank Fund, you can compare the effects of market volatilities on NYSE Composite and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Regional Bank.
Diversification Opportunities for NYSE Composite and Regional Bank
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Regional is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and Regional Bank go up and down completely randomly.
Pair Corralation between NYSE Composite and Regional Bank
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.27 times less return on investment than Regional Bank. But when comparing it to its historical volatility, NYSE Composite is 2.56 times less risky than Regional Bank. It trades about 0.08 of its potential returns per unit of risk. Regional Bank Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,582 in Regional Bank Fund on August 31, 2024 and sell it today you would earn a total of 812.00 from holding Regional Bank Fund or generate 31.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
NYSE Composite vs. Regional Bank Fund
Performance |
| Timeline |
NYSE Composite and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Regional Bank Fund
Pair trading matchups for Regional Bank
Pair Trading with NYSE Composite and Regional Bank
The main advantage of trading using opposite NYSE Composite and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Regional Bank vs. Fidelity Advisor Diversified | Regional Bank vs. Aqr Diversified Arbitrage | Regional Bank vs. Pimco Diversified Income | Regional Bank vs. Massmutual Premier 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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