Correlation Between NYSE Composite and RWE AG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and RWE AG 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 RWE AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and RWE AG PK, you can compare the effects of market volatilities on NYSE Composite and RWE AG 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 RWE AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and RWE AG.
Diversification Opportunities for NYSE Composite and RWE AG
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and RWE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and RWE AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE AG PK 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 RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG PK has no effect on the direction of NYSE Composite i.e., NYSE Composite and RWE AG go up and down completely randomly.
Pair Corralation between NYSE Composite and RWE AG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.47 times more return on investment than RWE AG. However, NYSE Composite is 2.12 times less risky than RWE AG. It trades about 0.06 of its potential returns per unit of risk. RWE AG PK is currently generating about -0.04 per unit of risk. If you would invest 1,581,890 in NYSE Composite on October 21, 2024 and sell it today you would earn a total of 378,847 from holding NYSE Composite or generate 23.95% 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. RWE AG PK
Performance |
| Timeline |
NYSE Composite and RWE AG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
RWE AG PK
Pair trading matchups for RWE AG
Pair Trading with NYSE Composite and RWE AG
The main advantage of trading using opposite NYSE Composite and RWE AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, RWE AG 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 RWE AG will offset losses from the drop in RWE AG's long position.| NYSE Composite vs. Chart Industries | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Schweiter Technologies AG | NYSE Composite vs. Primoris Services |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |