Correlation Between NYSE Composite and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Kontoor Brands 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 Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kontoor Brands, you can compare the effects of market volatilities on NYSE Composite and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kontoor Brands.
Diversification Opportunities for NYSE Composite and Kontoor Brands
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Kontoor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of NYSE Composite i.e., NYSE Composite and Kontoor Brands go up and down completely randomly.
Pair Corralation between NYSE Composite and Kontoor Brands
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.33 times less return on investment than Kontoor Brands. But when comparing it to its historical volatility, NYSE Composite is 3.21 times less risky than Kontoor Brands. It trades about 0.08 of its potential returns per unit of risk. Kontoor Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,920 in Kontoor Brands on August 30, 2024 and sell it today you would earn a total of 5,150 from holding Kontoor Brands or generate 131.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Kontoor Brands
Performance |
| Timeline |
NYSE Composite and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kontoor Brands
Pair trading matchups for Kontoor Brands
Pair Trading with NYSE Composite and Kontoor Brands
The main advantage of trading using opposite NYSE Composite and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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