Correlation Between NYSE Composite and Rising Dollar
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Rising Dollar 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 Rising Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Rising Dollar Profund, you can compare the effects of market volatilities on NYSE Composite and Rising Dollar 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 Rising Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Rising Dollar.
Diversification Opportunities for NYSE Composite and Rising Dollar
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Rising is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund 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 Rising Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of NYSE Composite i.e., NYSE Composite and Rising Dollar go up and down completely randomly.
Pair Corralation between NYSE Composite and Rising Dollar
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.72 times more return on investment than Rising Dollar. However, NYSE Composite is 1.72 times more volatile than Rising Dollar Profund. It trades about 0.08 of its potential returns per unit of risk. Rising Dollar Profund is currently generating about 0.03 per unit of risk. If you would invest 1,546,867 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 480,337 from holding NYSE Composite or generate 31.05% 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. Rising Dollar Profund
Performance |
| Timeline |
NYSE Composite and Rising Dollar Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Rising Dollar Profund
Pair trading matchups for Rising Dollar
Pair Trading with NYSE Composite and Rising Dollar
The main advantage of trading using opposite NYSE Composite and Rising Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Rising Dollar 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 Rising Dollar will offset losses from the drop in Rising Dollar's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Rising Dollar vs. Short Real Estate | Rising Dollar vs. Short Real Estate | Rising Dollar vs. Ultrashort Mid Cap Profund | Rising Dollar vs. Ultrashort Mid Cap Profund |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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