Correlation Between NYSE Composite and Invesco Main
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Invesco Main 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 Invesco Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Invesco Main Street, you can compare the effects of market volatilities on NYSE Composite and Invesco Main 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 Invesco Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Invesco Main.
Diversification Opportunities for NYSE Composite and Invesco Main
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Invesco Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Main Street 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 Invesco Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Main Street has no effect on the direction of NYSE Composite i.e., NYSE Composite and Invesco Main go up and down completely randomly.
Pair Corralation between NYSE Composite and Invesco Main
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.26 times more return on investment than Invesco Main. However, NYSE Composite is 3.85 times less risky than Invesco Main. It trades about 0.0 of its potential returns per unit of risk. Invesco Main Street is currently generating about -0.11 per unit of risk. If you would invest 1,973,358 in NYSE Composite on September 15, 2024 and sell it today you would lose (421.00) from holding NYSE Composite or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Invesco Main Street
Performance |
| Timeline |
NYSE Composite and Invesco Main Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Invesco Main Street
Pair trading matchups for Invesco Main
Pair Trading with NYSE Composite and Invesco Main
The main advantage of trading using opposite NYSE Composite and Invesco Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Invesco Main 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 Invesco Main will offset losses from the drop in Invesco Main's long position.| NYSE Composite vs. FARO Technologies | NYSE Composite vs. Apogee Therapeutics, Common | NYSE Composite vs. Genfit | NYSE Composite vs. Mind Medicine |
| Invesco Main vs. Dreyfus Natural Resources | Invesco Main vs. Fidelity Advisor Energy | Invesco Main vs. Adams Natural Resources | Invesco Main vs. Gamco Natural Resources |
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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