Correlation Between NYSE Composite and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Invesco FTSE 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 Invesco FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Invesco FTSE RAFI, you can compare the effects of market volatilities on NYSE Composite and Invesco FTSE 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 Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Invesco FTSE.
Diversification Opportunities for NYSE Composite and Invesco FTSE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Invesco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of NYSE Composite i.e., NYSE Composite and Invesco FTSE go up and down completely randomly.
Pair Corralation between NYSE Composite and Invesco FTSE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.71 times more return on investment than Invesco FTSE. However, NYSE Composite is 1.4 times less risky than Invesco FTSE. It trades about 0.08 of its potential returns per unit of risk. Invesco FTSE RAFI is currently generating about 0.05 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% 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. Invesco FTSE RAFI
Performance |
| Timeline |
NYSE Composite and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Invesco FTSE RAFI
Pair trading matchups for Invesco FTSE
Pair Trading with NYSE Composite and Invesco FTSE
The main advantage of trading using opposite NYSE Composite and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco DWA Emerging |
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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