Correlation Between NYSE Composite and Class 1
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Class 1 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 Class 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Class 1 Nickel, you can compare the effects of market volatilities on NYSE Composite and Class 1 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 Class 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Class 1.
Diversification Opportunities for NYSE Composite and Class 1
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Class is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Class 1 Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Class 1 Nickel 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 Class 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Class 1 Nickel has no effect on the direction of NYSE Composite i.e., NYSE Composite and Class 1 go up and down completely randomly.
Pair Corralation between NYSE Composite and Class 1
Assuming the 90 days trading horizon NYSE Composite is expected to generate 20.19 times less return on investment than Class 1. But when comparing it to its historical volatility, NYSE Composite is 29.02 times less risky than Class 1. It trades about 0.37 of its potential returns per unit of risk. Class 1 Nickel is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8.80 in Class 1 Nickel on September 4, 2024 and sell it today you would earn a total of 9.20 from holding Class 1 Nickel or generate 104.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Class 1 Nickel
Performance |
| Timeline |
NYSE Composite and Class 1 Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Class 1 Nickel
Pair trading matchups for Class 1
Pair Trading with NYSE Composite and Class 1
The main advantage of trading using opposite NYSE Composite and Class 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Class 1 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 Class 1 will offset losses from the drop in Class 1's long position.| NYSE Composite vs. Kite Realty Group | NYSE Composite vs. Tradeweb Markets | NYSE Composite vs. Meiwu Technology Co | NYSE Composite vs. Uber Technologies |
| Class 1 vs. Qubec Nickel Corp | Class 1 vs. IGO Limited | Class 1 vs. Avarone Metals | Class 1 vs. Adriatic Metals PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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