Correlation Between NYSE Composite and Melco International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Melco International 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 Melco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Melco International Development, you can compare the effects of market volatilities on NYSE Composite and Melco International 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 Melco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Melco International.
Diversification Opportunities for NYSE Composite and Melco International
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Melco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Melco International Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco International 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 Melco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Melco International go up and down completely randomly.
Pair Corralation between NYSE Composite and Melco International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.24 times more return on investment than Melco International. However, NYSE Composite is 4.1 times less risky than Melco International. It trades about -0.02 of its potential returns per unit of risk. Melco International Development is currently generating about -0.06 per unit of risk. If you would invest 1,998,000 in NYSE Composite on November 28, 2024 and sell it today you would lose (4,715) from holding NYSE Composite or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Melco International Developmen
Performance |
| Timeline |
NYSE Composite and Melco International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Melco International Development
Pair trading matchups for Melco International
Pair Trading with NYSE Composite and Melco International
The main advantage of trading using opposite NYSE Composite and Melco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Melco International 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 Melco International will offset losses from the drop in Melco International's long position.| NYSE Composite vs. Kenon Holdings | NYSE Composite vs. American Electric Power | NYSE Composite vs. Mesa Air Group | NYSE Composite vs. Suburban Propane Partners |
| Melco International vs. Monarch Casino Resort | Melco International vs. Red Rock Resorts | Melco International vs. Full House Resorts | Melco International vs. Ballys 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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