Correlation Between NYSE Composite and Matson
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Matson 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 Matson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Matson Inc, you can compare the effects of market volatilities on NYSE Composite and Matson 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 Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Matson.
Diversification Opportunities for NYSE Composite and Matson
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Matson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc 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 Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and Matson go up and down completely randomly.
Pair Corralation between NYSE Composite and Matson
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.63 times less return on investment than Matson. But when comparing it to its historical volatility, NYSE Composite is 6.0 times less risky than Matson. It trades about 0.29 of its potential returns per unit of risk. Matson Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 13,332 in Matson Inc on August 31, 2024 and sell it today you would earn a total of 1,976 from holding Matson Inc or generate 14.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Matson Inc
Performance |
| Timeline |
NYSE Composite and Matson Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Matson Inc
Pair trading matchups for Matson
Pair Trading with NYSE Composite and Matson
The main advantage of trading using opposite NYSE Composite and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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