Correlation Between NYSE Composite and Nextmart
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nextmart 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 Nextmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nextmart, you can compare the effects of market volatilities on NYSE Composite and Nextmart 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 Nextmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nextmart.
Diversification Opportunities for NYSE Composite and Nextmart
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Nextmart is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart 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 Nextmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextmart has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nextmart go up and down completely randomly.
Pair Corralation between NYSE Composite and Nextmart
Assuming the 90 days trading horizon NYSE Composite is expected to generate 27.56 times less return on investment than Nextmart. But when comparing it to its historical volatility, NYSE Composite is 54.44 times less risky than Nextmart. It trades about 0.24 of its potential returns per unit of risk. Nextmart is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Nextmart on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Nextmart or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Nextmart
Performance |
| Timeline |
NYSE Composite and Nextmart Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nextmart
Pair trading matchups for Nextmart
Pair Trading with NYSE Composite and Nextmart
The main advantage of trading using opposite NYSE Composite and Nextmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nextmart 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 Nextmart will offset losses from the drop in Nextmart's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Nextmart vs. Genesis Electronics Group | Nextmart vs. Industrial Nanotech | Nextmart vs. Intl Star | Nextmart vs. HeadsUp Entertainment International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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