Correlation Between NYSE Composite and Narragansett Electric
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Narragansett Electric 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 Narragansett Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The Narragansett Electric, you can compare the effects of market volatilities on NYSE Composite and Narragansett Electric 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 Narragansett Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Narragansett Electric.
Diversification Opportunities for NYSE Composite and Narragansett Electric
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Narragansett is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Narragansett Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Narragansett Electric 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 Narragansett Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Narragansett Electric has no effect on the direction of NYSE Composite i.e., NYSE Composite and Narragansett Electric go up and down completely randomly.
Pair Corralation between NYSE Composite and Narragansett Electric
If you would invest 5,500 in The Narragansett Electric on October 12, 2024 and sell it today you would earn a total of 0.00 from holding The Narragansett Electric or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
NYSE Composite vs. The Narragansett Electric
Performance |
| Timeline |
NYSE Composite and Narragansett Electric Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Narragansett Electric
Pair trading matchups for Narragansett Electric
Pair Trading with NYSE Composite and Narragansett Electric
The main advantage of trading using opposite NYSE Composite and Narragansett Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Narragansett Electric 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 Narragansett Electric will offset losses from the drop in Narragansett Electric's long position.| NYSE Composite vs. ANTA Sports Products | NYSE Composite vs. Global E Online | NYSE Composite vs. Sonos Inc | NYSE Composite vs. Mattel Inc |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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