Correlation Between NYSE Composite and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SPDR MSCI 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 SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SPDR MSCI USA, you can compare the effects of market volatilities on NYSE Composite and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SPDR MSCI.
Diversification Opportunities for NYSE Composite and SPDR MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SPDR MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI USA 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI USA has no effect on the direction of NYSE Composite i.e., NYSE Composite and SPDR MSCI go up and down completely randomly.
Pair Corralation between NYSE Composite and SPDR MSCI
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.76 times more return on investment than SPDR MSCI. However, NYSE Composite is 1.31 times less risky than SPDR MSCI. It trades about 0.26 of its potential returns per unit of risk. SPDR MSCI USA is currently generating about 0.15 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. SPDR MSCI USA
Performance |
| Timeline |
NYSE Composite and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SPDR MSCI USA
Pair trading matchups for SPDR MSCI
Pair Trading with NYSE Composite and SPDR MSCI
The main advantage of trading using opposite NYSE Composite and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| SPDR MSCI vs. SPDR MSCI ACWI | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |