Correlation Between NYSE Composite and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and NIBE Industrier 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 NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and NIBE Industrier AB, you can compare the effects of market volatilities on NYSE Composite and NIBE Industrier 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 NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and NIBE Industrier.
Diversification Opportunities for NYSE Composite and NIBE Industrier
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and NIBE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB 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 NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of NYSE Composite i.e., NYSE Composite and NIBE Industrier go up and down completely randomly.
Pair Corralation between NYSE Composite and NIBE Industrier
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.21 times more return on investment than NIBE Industrier. However, NYSE Composite is 4.84 times less risky than NIBE Industrier. It trades about 0.08 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.02 per unit of risk. If you would invest 1,546,867 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 480,337 from holding NYSE Composite or generate 31.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. NIBE Industrier AB
Performance |
| Timeline |
NYSE Composite and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
NIBE Industrier AB
Pair trading matchups for NIBE Industrier
Pair Trading with NYSE Composite and NIBE Industrier
The main advantage of trading using opposite NYSE Composite and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| NIBE Industrier vs. Carrier Global Corp | NIBE Industrier vs. Johnson Controls International | NIBE Industrier vs. Lennox International | NIBE Industrier vs. Masco |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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