Correlation Between NYSE Composite and Nokia
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nokia 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 Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nokia, you can compare the effects of market volatilities on NYSE Composite and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nokia.
Diversification Opportunities for NYSE Composite and Nokia
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Nokia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nokia go up and down completely randomly.
Pair Corralation between NYSE Composite and Nokia
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Nokia. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 3.37 times less risky than Nokia. The index trades about -0.02 of its potential returns per unit of risk. The Nokia is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 455.00 in Nokia on November 28, 2024 and sell it today you would earn a total of 45.00 from holding Nokia or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nokia
Performance |
| Timeline |
NYSE Composite and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nokia
Pair trading matchups for Nokia
Pair Trading with NYSE Composite and Nokia
The main advantage of trading using opposite NYSE Composite and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
| Nokia vs. Mynaric AG ADR | Nokia vs. Knowles Cor | Nokia vs. Comtech Telecommunications Corp | Nokia vs. Ituran Location and |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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