Correlation Between NYSE Composite and Oak Ridge
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Oak Ridge 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 Oak Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Oak Ridge Small, you can compare the effects of market volatilities on NYSE Composite and Oak Ridge 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 Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Oak Ridge.
Diversification Opportunities for NYSE Composite and Oak Ridge
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and OAK is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Oak Ridge Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Small 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Small has no effect on the direction of NYSE Composite i.e., NYSE Composite and Oak Ridge go up and down completely randomly.
Pair Corralation between NYSE Composite and Oak Ridge
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.5 times less return on investment than Oak Ridge. But when comparing it to its historical volatility, NYSE Composite is 1.84 times less risky than Oak Ridge. It trades about 0.13 of its potential returns per unit of risk. Oak Ridge Small is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 912.00 in Oak Ridge Small on August 28, 2024 and sell it today you would earn a total of 268.00 from holding Oak Ridge Small or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.52% |
| Values | Daily Returns |
NYSE Composite vs. Oak Ridge Small
Performance |
| Timeline |
NYSE Composite and Oak Ridge Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Oak Ridge Small
Pair trading matchups for Oak Ridge
Pair Trading with NYSE Composite and Oak Ridge
The main advantage of trading using opposite NYSE Composite and Oak Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Oak Ridge 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 Oak Ridge will offset losses from the drop in Oak Ridge'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 |
| Oak Ridge vs. North Square Investments | Oak Ridge vs. Advisory Research Strategic | Oak Ridge vs. Api Efficient Frontier | Oak Ridge vs. Oak Ridge Multi |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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