Correlation Between NYSE Composite and Itafos
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Itafos 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 Itafos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Itafos Inc, you can compare the effects of market volatilities on NYSE Composite and Itafos 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 Itafos. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Itafos.
Diversification Opportunities for NYSE Composite and Itafos
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Itafos is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Itafos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itafos 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 Itafos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itafos Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and Itafos go up and down completely randomly.
Pair Corralation between NYSE Composite and Itafos
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.93 times less return on investment than Itafos. But when comparing it to its historical volatility, NYSE Composite is 1.83 times less risky than Itafos. It trades about 0.32 of its potential returns per unit of risk. Itafos Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 125.00 in Itafos Inc on November 3, 2024 and sell it today you would earn a total of 11.00 from holding Itafos Inc or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
NYSE Composite vs. Itafos Inc
Performance |
| Timeline |
NYSE Composite and Itafos Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Itafos Inc
Pair trading matchups for Itafos
Pair Trading with NYSE Composite and Itafos
The main advantage of trading using opposite NYSE Composite and Itafos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Itafos 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 Itafos will offset losses from the drop in Itafos' long position.| NYSE Composite vs. Arrow Electronics | NYSE Composite vs. Cirmaker Technology | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Weibo Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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