Correlation Between NYSE Composite and National Grid
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and National Grid 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 National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and National Grid PLC, you can compare the effects of market volatilities on NYSE Composite and National Grid 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 National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and National Grid.
Diversification Opportunities for NYSE Composite and National Grid
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and National is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid PLC 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 National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of NYSE Composite i.e., NYSE Composite and National Grid go up and down completely randomly.
Pair Corralation between NYSE Composite and National Grid
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.6 times more return on investment than National Grid. However, NYSE Composite is 1.67 times less risky than National Grid. It trades about 0.21 of its potential returns per unit of risk. National Grid PLC is currently generating about -0.11 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 57,378 from holding NYSE Composite or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. National Grid PLC
Performance |
| Timeline |
NYSE Composite and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
National Grid PLC
Pair trading matchups for National Grid
Pair Trading with NYSE Composite and National Grid
The main advantage of trading using opposite NYSE Composite and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| National Grid vs. Southern Company | National Grid vs. Edison International | National Grid vs. American Electric Power | National Grid vs. Duke Energy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |