Correlation Between NYSE Composite and Equity Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Equity Growth 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 Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Equity Growth Strategy, you can compare the effects of market volatilities on NYSE Composite and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Equity Growth.
Diversification Opportunities for NYSE Composite and Equity Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Equity is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of NYSE Composite i.e., NYSE Composite and Equity Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Equity Growth
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.04 times more return on investment than Equity Growth. However, NYSE Composite is 1.04 times more volatile than Equity Growth Strategy. It trades about 0.23 of its potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.12 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Equity Growth Strategy
Performance |
| Timeline |
NYSE Composite and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Equity Growth Strategy
Pair trading matchups for Equity Growth
Pair Trading with NYSE Composite and Equity Growth
The main advantage of trading using opposite NYSE Composite and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Equity Growth vs. Western Asset Diversified | Equity Growth vs. Jhancock Diversified Macro | Equity Growth vs. Adams Diversified Equity | Equity Growth vs. Pgim Conservative Retirement |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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