Correlation Between NYSE Composite and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lifex Inflation-protec 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 Lifex Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lifex Inflation Protected Income, you can compare the effects of market volatilities on NYSE Composite and Lifex Inflation-protec 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 Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lifex Inflation-protec.
Diversification Opportunities for NYSE Composite and Lifex Inflation-protec
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Lifex is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec 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 Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between NYSE Composite and Lifex Inflation-protec
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.47 times more return on investment than Lifex Inflation-protec. However, NYSE Composite is 2.47 times more volatile than Lifex Inflation Protected Income. It trades about 0.14 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.14 per unit of risk. If you would invest 1,800,696 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 226,508 from holding NYSE Composite or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
NYSE Composite vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
NYSE Composite and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lifex Inflation Protected Income
Pair trading matchups for Lifex Inflation-protec
Pair Trading with NYSE Composite and Lifex Inflation-protec
The main advantage of trading using opposite NYSE Composite and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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