Correlation Between NYSE Composite and Optimum Small-mid
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Optimum Small-mid 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 Optimum Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Optimum Small Mid Cap, you can compare the effects of market volatilities on NYSE Composite and Optimum Small-mid 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 Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Optimum Small-mid.
Diversification Opportunities for NYSE Composite and Optimum Small-mid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Optimum is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid 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 Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of NYSE Composite i.e., NYSE Composite and Optimum Small-mid go up and down completely randomly.
Pair Corralation between NYSE Composite and Optimum Small-mid
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.63 times more return on investment than Optimum Small-mid. However, NYSE Composite is 1.57 times less risky than Optimum Small-mid. It trades about 0.08 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.05 per unit of risk. If you would invest 1,582,860 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 444,344 from holding NYSE Composite or generate 28.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
NYSE Composite vs. Optimum Small Mid Cap
Performance |
| Timeline |
NYSE Composite and Optimum Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Optimum Small Mid Cap
Pair trading matchups for Optimum Small-mid
Pair Trading with NYSE Composite and Optimum Small-mid
The main advantage of trading using opposite NYSE Composite and Optimum Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Optimum Small-mid 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 Optimum Small-mid will offset losses from the drop in Optimum Small-mid's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Optimum Small-mid vs. Principal Lifetime Hybrid | Optimum Small-mid vs. Delaware Limited Term Diversified | Optimum Small-mid vs. Tiaa Cref Smallmid Cap Equity | Optimum Small-mid vs. Blackrock Sm Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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