Correlation Between NYSE Composite and Pear Tree
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Pear Tree 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 Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Pear Tree Polaris, you can compare the effects of market volatilities on NYSE Composite and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Pear Tree.
Diversification Opportunities for NYSE Composite and Pear Tree
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Pear is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of NYSE Composite i.e., NYSE Composite and Pear Tree go up and down completely randomly.
Pair Corralation between NYSE Composite and Pear Tree
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.97 times more return on investment than Pear Tree. However, NYSE Composite is 1.03 times less risky than Pear Tree. It trades about 0.09 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.01 per unit of risk. If you would invest 1,721,232 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 278,650 from holding NYSE Composite or generate 16.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Pear Tree Polaris
Performance |
| Timeline |
NYSE Composite and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Pear Tree Polaris
Pair trading matchups for Pear Tree
Pair Trading with NYSE Composite and Pear Tree
The main advantage of trading using opposite NYSE Composite and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| Pear Tree vs. Sp Smallcap 600 | Pear Tree vs. Small Pany Growth | Pear Tree vs. Artisan Small Cap | Pear Tree vs. Sp Smallcap 600 |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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