Correlation Between NYSE Composite and Nexien Biopharma
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nexien Biopharma 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 Nexien Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nexien Biopharma, you can compare the effects of market volatilities on NYSE Composite and Nexien Biopharma 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 Nexien Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nexien Biopharma.
Diversification Opportunities for NYSE Composite and Nexien Biopharma
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Nexien is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nexien Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexien Biopharma 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 Nexien Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexien Biopharma has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nexien Biopharma go up and down completely randomly.
Pair Corralation between NYSE Composite and Nexien Biopharma
Assuming the 90 days trading horizon NYSE Composite is expected to generate 26.51 times less return on investment than Nexien Biopharma. But when comparing it to its historical volatility, NYSE Composite is 58.41 times less risky than Nexien Biopharma. It trades about 0.23 of its potential returns per unit of risk. Nexien Biopharma is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Nexien Biopharma on August 29, 2024 and sell it today you would lose (0.80) from holding Nexien Biopharma or give up 38.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Nexien Biopharma
Performance |
| Timeline |
NYSE Composite and Nexien Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nexien Biopharma
Pair trading matchups for Nexien Biopharma
Pair Trading with NYSE Composite and Nexien Biopharma
The main advantage of trading using opposite NYSE Composite and Nexien Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nexien Biopharma 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 Nexien Biopharma will offset losses from the drop in Nexien Biopharma's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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