Correlation Between NYSE Composite and International Developed
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and International Developed 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 International Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and International Developed Markets, you can compare the effects of market volatilities on NYSE Composite and International Developed 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 International Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and International Developed.
Diversification Opportunities for NYSE Composite and International Developed
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and International is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and International Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Developed 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 International Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Developed has no effect on the direction of NYSE Composite i.e., NYSE Composite and International Developed go up and down completely randomly.
Pair Corralation between NYSE Composite and International Developed
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.81 times more return on investment than International Developed. However, NYSE Composite is 1.23 times less risky than International Developed. It trades about 0.42 of its potential returns per unit of risk. International Developed Markets is currently generating about 0.02 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. International Developed Market
Performance |
| Timeline |
NYSE Composite and International Developed Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
International Developed Markets
Pair trading matchups for International Developed
Pair Trading with NYSE Composite and International Developed
The main advantage of trading using opposite NYSE Composite and International Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, International Developed 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 International Developed will offset losses from the drop in International Developed's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |