Correlation Between NYSE Composite and Red Electrica
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Red Electrica 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 Red Electrica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Red Electrica Corporacion, you can compare the effects of market volatilities on NYSE Composite and Red Electrica 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 Red Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Red Electrica.
Diversification Opportunities for NYSE Composite and Red Electrica
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Red is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Red Electrica Corporacion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Electrica Corporacion 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 Red Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Electrica Corporacion has no effect on the direction of NYSE Composite i.e., NYSE Composite and Red Electrica go up and down completely randomly.
Pair Corralation between NYSE Composite and Red Electrica
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.53 times more return on investment than Red Electrica. However, NYSE Composite is 1.88 times less risky than Red Electrica. It trades about 0.14 of its potential returns per unit of risk. Red Electrica Corporacion is currently generating about 0.05 per unit of risk. If you would invest 1,613,685 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 413,519 from holding NYSE Composite or generate 25.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Red Electrica Corporacion
Performance |
| Timeline |
NYSE Composite and Red Electrica Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Red Electrica Corporacion
Pair trading matchups for Red Electrica
Pair Trading with NYSE Composite and Red Electrica
The main advantage of trading using opposite NYSE Composite and Red Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Red Electrica 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 Red Electrica will offset losses from the drop in Red Electrica's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Red Electrica vs. Engie Brasil Energia | Red Electrica vs. Centrais Eltricas Brasileiras | Red Electrica vs. Centrais Electricas Brasileiras | Red Electrica vs. Ameren Corp |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |