Correlation Between NYSE Composite and Edge Midcap
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Edge Midcap 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 Edge Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Edge Midcap Fund, you can compare the effects of market volatilities on NYSE Composite and Edge Midcap 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 Edge Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Edge Midcap.
Diversification Opportunities for NYSE Composite and Edge Midcap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Edge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Edge Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edge Midcap Fund 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 Edge Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edge Midcap Fund has no effect on the direction of NYSE Composite i.e., NYSE Composite and Edge Midcap go up and down completely randomly.
Pair Corralation between NYSE Composite and Edge Midcap
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.07 times less return on investment than Edge Midcap. But when comparing it to its historical volatility, NYSE Composite is 1.31 times less risky than Edge Midcap. It trades about 0.13 of its potential returns per unit of risk. Edge Midcap Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,255 in Edge Midcap Fund on September 3, 2024 and sell it today you would earn a total of 170.00 from holding Edge Midcap Fund or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Edge Midcap Fund
Performance |
| Timeline |
NYSE Composite and Edge Midcap Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Edge Midcap Fund
Pair trading matchups for Edge Midcap
Pair Trading with NYSE Composite and Edge Midcap
The main advantage of trading using opposite NYSE Composite and Edge Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Edge Midcap 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 Edge Midcap will offset losses from the drop in Edge Midcap's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Edge Midcap vs. Massmutual Premier Diversified | Edge Midcap vs. Western Asset Diversified | Edge Midcap vs. Aqr Diversified Arbitrage | Edge Midcap vs. Blackrock Conservative Prprdptfinstttnl |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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