Correlation Between NYSE Composite and IQ Merger
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and IQ Merger 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 IQ Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and IQ Merger Arbitrage, you can compare the effects of market volatilities on NYSE Composite and IQ Merger 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 IQ Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IQ Merger.
Diversification Opportunities for NYSE Composite and IQ Merger
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and MNA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage 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 IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of NYSE Composite i.e., NYSE Composite and IQ Merger go up and down completely randomly.
Pair Corralation between NYSE Composite and IQ Merger
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.39 times more return on investment than IQ Merger. However, NYSE Composite is 2.39 times more volatile than IQ Merger Arbitrage. It trades about 0.08 of its potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.03 per unit of risk. If you would invest 1,553,974 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 468,062 from holding NYSE Composite or generate 30.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. IQ Merger Arbitrage
Performance |
| Timeline |
NYSE Composite and IQ Merger Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
IQ Merger Arbitrage
Pair trading matchups for IQ Merger
Pair Trading with NYSE Composite and IQ Merger
The main advantage of trading using opposite NYSE Composite and IQ Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, IQ Merger 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 IQ Merger will offset losses from the drop in IQ Merger's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| IQ Merger vs. IQ Hedge Multi Strategy | IQ Merger vs. ProShares Merger ETF | IQ Merger vs. AGFiQ Market Neutral |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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