Correlation Between NYSE Composite and Petra Diamonds
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Petra Diamonds 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 Petra Diamonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Petra Diamonds Limited, you can compare the effects of market volatilities on NYSE Composite and Petra Diamonds 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 Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Petra Diamonds.
Diversification Opportunities for NYSE Composite and Petra Diamonds
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NYSE and Petra is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds 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 Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of NYSE Composite i.e., NYSE Composite and Petra Diamonds go up and down completely randomly.
Pair Corralation between NYSE Composite and Petra Diamonds
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.21 times more return on investment than Petra Diamonds. However, NYSE Composite is 4.67 times less risky than Petra Diamonds. It trades about 0.08 of its potential returns per unit of risk. Petra Diamonds Limited is currently generating about -0.05 per unit of risk. If you would invest 1,556,254 in NYSE Composite on September 3, 2024 and sell it today you would earn a total of 470,950 from holding NYSE Composite or generate 30.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Petra Diamonds Limited
Performance |
| Timeline |
NYSE Composite and Petra Diamonds Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Petra Diamonds Limited
Pair trading matchups for Petra Diamonds
Pair Trading with NYSE Composite and Petra Diamonds
The main advantage of trading using opposite NYSE Composite and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Petra Diamonds vs. Northam Platinum Holdings | Petra Diamonds vs. Clifton Mining Co | Petra Diamonds vs. Cartier Iron Corp | Petra Diamonds vs. Alien Metals |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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