Correlation Between NYSE Composite and KBND
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and KBND 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 KBND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and KBND, you can compare the effects of market volatilities on NYSE Composite and KBND 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 KBND. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and KBND.
Diversification Opportunities for NYSE Composite and KBND
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and KBND is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and KBND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBND 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 KBND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBND has no effect on the direction of NYSE Composite i.e., NYSE Composite and KBND go up and down completely randomly.
Pair Corralation between NYSE Composite and KBND
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.13 times more return on investment than KBND. However, NYSE Composite is 1.13 times more volatile than KBND. It trades about 0.08 of its potential returns per unit of risk. KBND is currently generating about 0.01 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
NYSE Composite vs. KBND
Performance |
| Timeline |
NYSE Composite and KBND Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
KBND
Pair trading matchups for KBND
Pair Trading with NYSE Composite and KBND
The main advantage of trading using opposite NYSE Composite and KBND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, KBND 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 KBND will offset losses from the drop in KBND's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| KBND vs. VanEck China Bond | KBND vs. KraneShares Asia Pacific | KBND vs. KraneShares MSCI All | KBND vs. First Trust Long |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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