Correlation Between NYSE Composite and Mairs Power
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Mairs Power 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 Mairs Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Mairs Power Growth, you can compare the effects of market volatilities on NYSE Composite and Mairs Power 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 Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Mairs Power.
Diversification Opportunities for NYSE Composite and Mairs Power
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Mairs is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Mairs Power Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Growth 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 Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Mairs Power go up and down completely randomly.
Pair Corralation between NYSE Composite and Mairs Power
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.02 times less return on investment than Mairs Power. But when comparing it to its historical volatility, NYSE Composite is 1.26 times less risky than Mairs Power. It trades about 0.14 of its potential returns per unit of risk. Mairs Power Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 16,259 in Mairs Power Growth on September 1, 2024 and sell it today you would earn a total of 2,081 from holding Mairs Power Growth or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. Mairs Power Growth
Performance |
| Timeline |
NYSE Composite and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Mairs Power Growth
Pair trading matchups for Mairs Power
Pair Trading with NYSE Composite and Mairs Power
The main advantage of trading using opposite NYSE Composite and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Mairs Power 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 Mairs Power will offset losses from the drop in Mairs Power's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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