Correlation Between NYSE Composite and Optical Cable
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Optical Cable 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 Optical Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Optical Cable, you can compare the effects of market volatilities on NYSE Composite and Optical Cable 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 Optical Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Optical Cable.
Diversification Opportunities for NYSE Composite and Optical Cable
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Optical is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable 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 Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of NYSE Composite i.e., NYSE Composite and Optical Cable go up and down completely randomly.
Pair Corralation between NYSE Composite and Optical Cable
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.32 times more return on investment than Optical Cable. However, NYSE Composite is 3.14 times less risky than Optical Cable. It trades about 0.24 of its potential returns per unit of risk. Optical Cable is currently generating about 0.0 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Optical Cable
Performance |
| Timeline |
NYSE Composite and Optical Cable Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Optical Cable
Pair trading matchups for Optical Cable
Pair Trading with NYSE Composite and Optical Cable
The main advantage of trading using opposite NYSE Composite and Optical Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Optical Cable 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 Optical Cable will offset losses from the drop in Optical Cable'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 |
| Optical Cable vs. KVH Industries | Optical Cable vs. Knowles Cor | Optical Cable vs. Comtech Telecommunications Corp | Optical Cable vs. Lantronix |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |