Correlation Between NYSE Composite and Power Integrations
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Power Integrations 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 Power Integrations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Power Integrations, you can compare the effects of market volatilities on NYSE Composite and Power Integrations 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 Power Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Power Integrations.
Diversification Opportunities for NYSE Composite and Power Integrations
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Power is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of NYSE Composite i.e., NYSE Composite and Power Integrations go up and down completely randomly.
Pair Corralation between NYSE Composite and Power Integrations
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.33 times more return on investment than Power Integrations. However, NYSE Composite is 3.07 times less risky than Power Integrations. It trades about 0.08 of its potential returns per unit of risk. Power Integrations is currently generating about 0.0 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Power Integrations
Performance |
| Timeline |
NYSE Composite and Power Integrations Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Power Integrations
Pair trading matchups for Power Integrations
Pair Trading with NYSE Composite and Power Integrations
The main advantage of trading using opposite NYSE Composite and Power Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Power Integrations 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 Power Integrations will offset losses from the drop in Power Integrations' long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Power Integrations vs. First Solar | Power Integrations vs. Sunrun Inc | Power Integrations vs. Canadian Solar | Power Integrations vs. SolarEdge Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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