Correlation Between NYSE Composite and Dorian LPG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Dorian LPG 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 Dorian LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Dorian LPG, you can compare the effects of market volatilities on NYSE Composite and Dorian LPG 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 Dorian LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Dorian LPG.
Diversification Opportunities for NYSE Composite and Dorian LPG
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Dorian is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Dorian LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorian LPG 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 Dorian LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorian LPG has no effect on the direction of NYSE Composite i.e., NYSE Composite and Dorian LPG go up and down completely randomly.
Pair Corralation between NYSE Composite and Dorian LPG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.29 times more return on investment than Dorian LPG. However, NYSE Composite is 3.43 times less risky than Dorian LPG. It trades about 0.12 of its potential returns per unit of risk. Dorian LPG is currently generating about -0.28 per unit of risk. If you would invest 1,910,040 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 86,790 from holding NYSE Composite or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Dorian LPG
Performance |
| Timeline |
NYSE Composite and Dorian LPG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Dorian LPG
Pair trading matchups for Dorian LPG
Pair Trading with NYSE Composite and Dorian LPG
The main advantage of trading using opposite NYSE Composite and Dorian LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Dorian LPG 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 Dorian LPG will offset losses from the drop in Dorian LPG's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Dorian LPG vs. Scorpio Tankers | Dorian LPG vs. DHT Holdings | Dorian LPG vs. Teekay | Dorian LPG vs. HUMANA INC |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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