Correlation Between NYSE Composite and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SPDR ICE 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 SPDR ICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SPDR ICE Preferred, you can compare the effects of market volatilities on NYSE Composite and SPDR ICE 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 SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SPDR ICE.
Diversification Opportunities for NYSE Composite and SPDR ICE
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and SPDR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of NYSE Composite i.e., NYSE Composite and SPDR ICE go up and down completely randomly.
Pair Corralation between NYSE Composite and SPDR ICE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.41 times more return on investment than SPDR ICE. However, NYSE Composite is 1.41 times more volatile than SPDR ICE Preferred. It trades about 0.13 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.1 per unit of risk. If you would invest 1,800,701 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 211,644 from holding NYSE Composite or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. SPDR ICE Preferred
Performance |
| Timeline |
NYSE Composite and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SPDR ICE Preferred
Pair trading matchups for SPDR ICE
Pair Trading with NYSE Composite and SPDR ICE
The main advantage of trading using opposite NYSE Composite and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SPDR ICE 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 SPDR ICE will offset losses from the drop in SPDR ICE's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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