Correlation Between NYSE Composite and MBIA
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and MBIA 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 MBIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and MBIA Inc, you can compare the effects of market volatilities on NYSE Composite and MBIA 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 MBIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and MBIA.
Diversification Opportunities for NYSE Composite and MBIA
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and MBIA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and MBIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBIA 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 MBIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBIA Inc has no effect on the direction of NYSE Composite i.e., NYSE Composite and MBIA go up and down completely randomly.
Pair Corralation between NYSE Composite and MBIA
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.19 times more return on investment than MBIA. However, NYSE Composite is 5.13 times less risky than MBIA. It trades about -0.18 of its potential returns per unit of risk. MBIA Inc is currently generating about -0.28 per unit of risk. If you would invest 2,015,758 in NYSE Composite on December 8, 2024 and sell it today you would lose (58,452) from holding NYSE Composite or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. MBIA Inc
Performance |
| Timeline |
NYSE Composite and MBIA Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
MBIA Inc
Pair trading matchups for MBIA
Pair Trading with NYSE Composite and MBIA
The main advantage of trading using opposite NYSE Composite and MBIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, MBIA 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 MBIA will offset losses from the drop in MBIA's long position.| NYSE Composite vs. Aduro Clean Technologies | ||
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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