Correlation Between NYSE Composite and Precious Metals
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Precious Metals 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 Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Precious Metals Ultrasector, you can compare the effects of market volatilities on NYSE Composite and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Precious Metals.
Diversification Opportunities for NYSE Composite and Precious Metals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Precious is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Precious Metals Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals Ultr 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals Ultr has no effect on the direction of NYSE Composite i.e., NYSE Composite and Precious Metals go up and down completely randomly.
Pair Corralation between NYSE Composite and Precious Metals
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.2 times more return on investment than Precious Metals. However, NYSE Composite is 5.04 times less risky than Precious Metals. It trades about 0.27 of its potential returns per unit of risk. Precious Metals Ultrasector is currently generating about -0.24 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Precious Metals Ultrasector
Performance |
| Timeline |
NYSE Composite and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Precious Metals Ultrasector
Pair trading matchups for Precious Metals
Pair Trading with NYSE Composite and Precious Metals
The main advantage of trading using opposite NYSE Composite and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Precious Metals vs. Direxion Monthly Nasdaq 100 | Precious Metals vs. HUMANA INC | Precious Metals vs. Aquagold International | Precious Metals vs. Barloworld Ltd ADR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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