Correlation Between NYSE Composite and Wheat Futures
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Wheat Futures 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 Wheat Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Wheat Futures, you can compare the effects of market volatilities on NYSE Composite and Wheat Futures 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 Wheat Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Wheat Futures.
Diversification Opportunities for NYSE Composite and Wheat Futures
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Wheat is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Wheat Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheat Futures 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 Wheat Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheat Futures has no effect on the direction of NYSE Composite i.e., NYSE Composite and Wheat Futures go up and down completely randomly.
Pair Corralation between NYSE Composite and Wheat Futures
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.41 times more return on investment than Wheat Futures. However, NYSE Composite is 2.41 times less risky than Wheat Futures. It trades about 0.42 of its potential returns per unit of risk. Wheat Futures is currently generating about -0.16 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Wheat Futures
Performance |
| Timeline |
NYSE Composite and Wheat Futures Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Wheat Futures
Pair trading matchups for Wheat Futures
Pair Trading with NYSE Composite and Wheat Futures
The main advantage of trading using opposite NYSE Composite and Wheat Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Wheat Futures 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 Wheat Futures will offset losses from the drop in Wheat Futures' long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Wheat Futures vs. Coffee | Wheat Futures vs. Sugar | Wheat Futures vs. 10 Year T Note Futures | Wheat Futures vs. Nasdaq 100 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |