Correlation Between NYSE Composite and Short Duration
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Short Duration 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 Short Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Short Duration Bond, you can compare the effects of market volatilities on NYSE Composite and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Short Duration.
Diversification Opportunities for NYSE Composite and Short Duration
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Short is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Short Duration Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Bond 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Bond has no effect on the direction of NYSE Composite i.e., NYSE Composite and Short Duration go up and down completely randomly.
Pair Corralation between NYSE Composite and Short Duration
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.93 times more return on investment than Short Duration. However, NYSE Composite is 4.93 times more volatile than Short Duration Bond. It trades about 0.08 of its potential returns per unit of risk. Short Duration Bond is currently generating about 0.13 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NYSE Composite vs. Short Duration Bond
Performance |
| Timeline |
NYSE Composite and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Short Duration Bond
Pair trading matchups for Short Duration
Pair Trading with NYSE Composite and Short Duration
The main advantage of trading using opposite NYSE Composite and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Short Duration vs. Short Duration Inflation | Short Duration vs. Arrow Managed Futures | Short Duration vs. Fidelity Sai Inflationfocused | Short Duration vs. Lord Abbett Inflation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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