Correlation Between NYSE Composite and Quantified Market
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Quantified Market 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 Quantified Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Quantified Market Leaders, you can compare the effects of market volatilities on NYSE Composite and Quantified Market 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 Quantified Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Quantified Market.
Diversification Opportunities for NYSE Composite and Quantified Market
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Quantified is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Quantified Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Market Leaders 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 Quantified Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Market Leaders has no effect on the direction of NYSE Composite i.e., NYSE Composite and Quantified Market go up and down completely randomly.
Pair Corralation between NYSE Composite and Quantified Market
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.52 times more return on investment than Quantified Market. However, NYSE Composite is 1.94 times less risky than Quantified Market. It trades about 0.21 of its potential returns per unit of risk. Quantified Market Leaders is currently generating about -0.05 per unit of risk. If you would invest 1,911,944 in NYSE Composite on October 21, 2024 and sell it today you would earn a total of 48,793 from holding NYSE Composite or generate 2.55% 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. Quantified Market Leaders
Performance |
| Timeline |
NYSE Composite and Quantified Market Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Quantified Market Leaders
Pair trading matchups for Quantified Market
Pair Trading with NYSE Composite and Quantified Market
The main advantage of trading using opposite NYSE Composite and Quantified Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Quantified Market 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 Quantified Market will offset losses from the drop in Quantified Market's long position.| NYSE Composite vs. National Health Investors | NYSE Composite vs. Arbor Realty Trust | NYSE Composite vs. Canaf Investments | NYSE Composite vs. Freedom Holding Corp |
| Quantified Market vs. Spectrum Advisors Preferred | Quantified Market vs. Ontrack E Fund | Quantified Market vs. Ontrack E Fund | Quantified Market vs. Spectrum Unconstrained |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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