Correlation Between NYSE Composite and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lowes Companies, you can compare the effects of market volatilities on NYSE Composite and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lowes Companies.
Diversification Opportunities for NYSE Composite and Lowes Companies
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Lowes is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lowes Companies go up and down completely randomly.
Pair Corralation between NYSE Composite and Lowes Companies
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.6 times more return on investment than Lowes Companies. However, NYSE Composite is 1.67 times less risky than Lowes Companies. It trades about 0.32 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.19 per unit of risk. If you would invest 1,924,074 in NYSE Composite on November 9, 2024 and sell it today you would earn a total of 91,684 from holding NYSE Composite or generate 4.77% 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. Lowes Companies
Performance |
| Timeline |
NYSE Composite and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lowes Companies
Pair trading matchups for Lowes Companies
Pair Trading with NYSE Composite and Lowes Companies
The main advantage of trading using opposite NYSE Composite and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| NYSE Composite vs. Integrated Media Technology | NYSE Composite vs. Custom Truck One | NYSE Composite vs. Funko Inc | NYSE Composite vs. Multi Ways Holdings |
| Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Home Depot |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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