Correlation Between NYSE Composite and Inflation Protection
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Inflation Protection 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 Inflation Protection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Inflation Protection Fund, you can compare the effects of market volatilities on NYSE Composite and Inflation Protection 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 Inflation Protection. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Inflation Protection.
Diversification Opportunities for NYSE Composite and Inflation Protection
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Inflation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Inflation Protection Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protection 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 Inflation Protection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protection has no effect on the direction of NYSE Composite i.e., NYSE Composite and Inflation Protection go up and down completely randomly.
Pair Corralation between NYSE Composite and Inflation Protection
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.23 times more return on investment than Inflation Protection. However, NYSE Composite is 2.23 times more volatile than Inflation Protection Fund. It trades about 0.41 of its potential returns per unit of risk. Inflation Protection Fund is currently generating about 0.18 per unit of risk. If you would invest 1,925,354 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 101,850 from holding NYSE Composite or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Inflation Protection Fund
Performance |
| Timeline |
NYSE Composite and Inflation Protection Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Inflation Protection Fund
Pair trading matchups for Inflation Protection
Pair Trading with NYSE Composite and Inflation Protection
The main advantage of trading using opposite NYSE Composite and Inflation Protection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Inflation Protection 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 Inflation Protection will offset losses from the drop in Inflation Protection's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Inflation Protection vs. Siit High Yield | Inflation Protection vs. Metropolitan West High | Inflation Protection vs. Ab Global Risk | Inflation Protection vs. Franklin High Income |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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