Correlation Between NYSE Composite and Nucor Corp
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nucor Corp 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 Nucor Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nucor Corp, you can compare the effects of market volatilities on NYSE Composite and Nucor Corp 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 Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nucor Corp.
Diversification Opportunities for NYSE Composite and Nucor Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Nucor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp 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 Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nucor Corp go up and down completely randomly.
Pair Corralation between NYSE Composite and Nucor Corp
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.55 times less return on investment than Nucor Corp. But when comparing it to its historical volatility, NYSE Composite is 5.99 times less risky than Nucor Corp. It trades about 0.24 of its potential returns per unit of risk. Nucor Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,773 in Nucor Corp on August 27, 2024 and sell it today you would earn a total of 571.00 from holding Nucor Corp or generate 3.87% 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. Nucor Corp
Performance |
| Timeline |
NYSE Composite and Nucor Corp Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nucor Corp
Pair trading matchups for Nucor Corp
Pair Trading with NYSE Composite and Nucor Corp
The main advantage of trading using opposite NYSE Composite and Nucor Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nucor Corp 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 Nucor Corp will offset losses from the drop in Nucor Corp's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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