Correlation Between NYSE Composite and Lear
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lear 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 Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lear Corporation, you can compare the effects of market volatilities on NYSE Composite and Lear 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 Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lear.
Diversification Opportunities for NYSE Composite and Lear
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Lear is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lear go up and down completely randomly.
Pair Corralation between NYSE Composite and Lear
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.31 times more return on investment than Lear. However, NYSE Composite is 3.2 times less risky than Lear. It trades about 0.12 of its potential returns per unit of risk. Lear Corporation is currently generating about -0.13 per unit of risk. If you would invest 1,929,223 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 91,759 from holding NYSE Composite or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Lear Corp.
Performance |
| Timeline |
NYSE Composite and Lear Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lear Corporation
Pair trading matchups for Lear
Pair Trading with NYSE Composite and Lear
The main advantage of trading using opposite NYSE Composite and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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