Correlation Between NYSE Composite and Next Generation
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Next Generation 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 Next Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Next Generation Management, you can compare the effects of market volatilities on NYSE Composite and Next Generation 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 Next Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Next Generation.
Diversification Opportunities for NYSE Composite and Next Generation
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Next is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Next Generation Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Generation Mana 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 Next Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Generation Mana has no effect on the direction of NYSE Composite i.e., NYSE Composite and Next Generation go up and down completely randomly.
Pair Corralation between NYSE Composite and Next Generation
Assuming the 90 days trading horizon NYSE Composite is expected to generate 222.63 times less return on investment than Next Generation. But when comparing it to its historical volatility, NYSE Composite is 46.51 times less risky than Next Generation. It trades about 0.02 of its potential returns per unit of risk. Next Generation Management is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Next Generation Management on September 13, 2024 and sell it today you would lose (0.02) from holding Next Generation Management or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
NYSE Composite vs. Next Generation Management
Performance |
| Timeline |
NYSE Composite and Next Generation Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Next Generation Management
Pair trading matchups for Next Generation
Pair Trading with NYSE Composite and Next Generation
The main advantage of trading using opposite NYSE Composite and Next Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Next Generation 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 Next Generation will offset losses from the drop in Next Generation's long position.| NYSE Composite vs. Boston Beer | NYSE Composite vs. Freedom Bank of | NYSE Composite vs. KeyCorp | NYSE Composite vs. LithiumBank Resources Corp |
| Next Generation vs. The BC Bud | Next Generation vs. Amexdrug | Next Generation vs. Nutranomics | Next Generation vs. Aion Therapeutic |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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