Correlation Between NYSE Composite and Newtek Business
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Newtek Business 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 Newtek Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Newtek Business Services, you can compare the effects of market volatilities on NYSE Composite and Newtek Business 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 Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Newtek Business.
Diversification Opportunities for NYSE Composite and Newtek Business
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Newtek is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services 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 Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of NYSE Composite i.e., NYSE Composite and Newtek Business go up and down completely randomly.
Pair Corralation between NYSE Composite and Newtek Business
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.87 times less return on investment than Newtek Business. But when comparing it to its historical volatility, NYSE Composite is 5.48 times less risky than Newtek Business. It trades about 0.24 of its potential returns per unit of risk. Newtek Business Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,356 in Newtek Business Services on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Newtek Business Services or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Newtek Business Services
Performance |
| Timeline |
NYSE Composite and Newtek Business Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Newtek Business Services
Pair trading matchups for Newtek Business
Pair Trading with NYSE Composite and Newtek Business
The main advantage of trading using opposite NYSE Composite and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Newtek Business 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 Newtek Business will offset losses from the drop in Newtek Business' long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Newtek Business vs. First Community | Newtek Business vs. Old Point Financial | Newtek Business vs. Oak Valley Bancorp | Newtek Business vs. Chemung Financial 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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