Correlation Between NYSE Composite and Mercury Systems
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Mercury Systems 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 Mercury Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Mercury Systems, you can compare the effects of market volatilities on NYSE Composite and Mercury Systems 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 Mercury Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Mercury Systems.
Diversification Opportunities for NYSE Composite and Mercury Systems
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Mercury is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Mercury Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Systems 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 Mercury Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Systems has no effect on the direction of NYSE Composite i.e., NYSE Composite and Mercury Systems go up and down completely randomly.
Pair Corralation between NYSE Composite and Mercury Systems
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than Mercury Systems. However, NYSE Composite is 3.94 times less risky than Mercury Systems. It trades about 0.08 of its potential returns per unit of risk. Mercury Systems is currently generating about -0.01 per unit of risk. If you would invest 1,589,536 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 422,809 from holding NYSE Composite or generate 26.6% 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. Mercury Systems
Performance |
| Timeline |
NYSE Composite and Mercury Systems Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Mercury Systems
Pair trading matchups for Mercury Systems
Pair Trading with NYSE Composite and Mercury Systems
The main advantage of trading using opposite NYSE Composite and Mercury Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Mercury Systems 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 Mercury Systems will offset losses from the drop in Mercury Systems' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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