Correlation Between NYSE Composite and OFS Credit
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and OFS Credit 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 OFS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and OFS Credit, you can compare the effects of market volatilities on NYSE Composite and OFS Credit 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 OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and OFS Credit.
Diversification Opportunities for NYSE Composite and OFS Credit
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and OFS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit 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 OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of NYSE Composite i.e., NYSE Composite and OFS Credit go up and down completely randomly.
Pair Corralation between NYSE Composite and OFS Credit
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.55 times more return on investment than OFS Credit. However, NYSE Composite is 1.55 times more volatile than OFS Credit. It trades about 0.24 of its potential returns per unit of risk. OFS Credit is currently generating about 0.07 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. OFS Credit
Performance |
| Timeline |
NYSE Composite and OFS Credit Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
OFS Credit
Pair trading matchups for OFS Credit
Pair Trading with NYSE Composite and OFS Credit
The main advantage of trading using opposite NYSE Composite and OFS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, OFS Credit 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 OFS Credit will offset losses from the drop in OFS Credit'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 |
| OFS Credit vs. Oxford Lane Capital | OFS Credit vs. XOMA Corporation | OFS Credit vs. HUMANA INC | OFS Credit vs. Aquagold 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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