Correlation Between NYSE Composite and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Kensington Dynamic 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 Kensington Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kensington Dynamic Growth, you can compare the effects of market volatilities on NYSE Composite and Kensington Dynamic 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 Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kensington Dynamic.
Diversification Opportunities for NYSE Composite and Kensington Dynamic
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Kensington is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth 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 Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Kensington Dynamic go up and down completely randomly.
Pair Corralation between NYSE Composite and Kensington Dynamic
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.91 times more return on investment than Kensington Dynamic. However, NYSE Composite is 1.1 times less risky than Kensington Dynamic. It trades about 0.09 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.03 per unit of risk. If you would invest 1,626,371 in NYSE Composite on September 12, 2024 and sell it today you would earn a total of 361,819 from holding NYSE Composite or generate 22.25% 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. Kensington Dynamic Growth
Performance |
| Timeline |
NYSE Composite and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kensington Dynamic Growth
Pair trading matchups for Kensington Dynamic
Pair Trading with NYSE Composite and Kensington Dynamic
The main advantage of trading using opposite NYSE Composite and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
| Kensington Dynamic vs. Needham Aggressive Growth | Kensington Dynamic vs. Qs Defensive Growth | Kensington Dynamic vs. T Rowe Price | Kensington Dynamic vs. Champlain Mid Cap |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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