Correlation Between NYSE Composite and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and PeakShares Sector 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 PeakShares Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and PeakShares Sector Rotation, you can compare the effects of market volatilities on NYSE Composite and PeakShares Sector 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 PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and PeakShares Sector.
Diversification Opportunities for NYSE Composite and PeakShares Sector
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and PeakShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector 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 PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of NYSE Composite i.e., NYSE Composite and PeakShares Sector go up and down completely randomly.
Pair Corralation between NYSE Composite and PeakShares Sector
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.04 times less return on investment than PeakShares Sector. But when comparing it to its historical volatility, NYSE Composite is 1.16 times less risky than PeakShares Sector. It trades about 0.14 of its potential returns per unit of risk. PeakShares Sector Rotation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,544 in PeakShares Sector Rotation on September 1, 2024 and sell it today you would earn a total of 332.00 from holding PeakShares Sector Rotation or generate 13.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. PeakShares Sector Rotation
Performance |
| Timeline |
NYSE Composite and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
PeakShares Sector Rotation
Pair trading matchups for PeakShares Sector
Pair Trading with NYSE Composite and PeakShares Sector
The main advantage of trading using opposite NYSE Composite and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| PeakShares Sector vs. Global X SP | PeakShares Sector vs. Amplify CWP Enhanced | PeakShares Sector vs. JPMorgan Equity Premium |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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