Correlation Between NYSE Composite and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and LyondellBasell Industries 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 LyondellBasell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and LyondellBasell Industries NV, you can compare the effects of market volatilities on NYSE Composite and LyondellBasell Industries 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 LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and LyondellBasell Industries.
Diversification Opportunities for NYSE Composite and LyondellBasell Industries
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and LyondellBasell is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries 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 LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of NYSE Composite i.e., NYSE Composite and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between NYSE Composite and LyondellBasell Industries
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.6 times more return on investment than LyondellBasell Industries. However, NYSE Composite is 1.66 times less risky than LyondellBasell Industries. It trades about 0.24 of its potential returns per unit of risk. LyondellBasell Industries NV is currently generating about -0.18 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% 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. LyondellBasell Industries NV
Performance |
| Timeline |
NYSE Composite and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
LyondellBasell Industries NV
Pair trading matchups for LyondellBasell Industries
Pair Trading with NYSE Composite and LyondellBasell Industries
The main advantage of trading using opposite NYSE Composite and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| LyondellBasell Industries vs. International Flavors Fragrances | LyondellBasell Industries vs. Cabot | LyondellBasell Industries vs. Westlake Chemical | LyondellBasell Industries vs. Air Products and |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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