Correlation Between NYSE Composite and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Kingsway Financial 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 Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kingsway Financial Services, you can compare the effects of market volatilities on NYSE Composite and Kingsway Financial 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 Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kingsway Financial.
Diversification Opportunities for NYSE Composite and Kingsway Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Kingsway is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of NYSE Composite i.e., NYSE Composite and Kingsway Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and Kingsway Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.08 times less return on investment than Kingsway Financial. But when comparing it to its historical volatility, NYSE Composite is 2.76 times less risky than Kingsway Financial. It trades about 0.08 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 718.00 in Kingsway Financial Services on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Kingsway Financial Services or generate 23.68% 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. Kingsway Financial Services
Performance |
| Timeline |
NYSE Composite and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kingsway Financial Services
Pair trading matchups for Kingsway Financial
Pair Trading with NYSE Composite and Kingsway Financial
The main advantage of trading using opposite NYSE Composite and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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