Correlation Between NYSE Composite and Commodities Strategy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Commodities Strategy 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 Commodities Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Commodities Strategy Fund, you can compare the effects of market volatilities on NYSE Composite and Commodities Strategy 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 Commodities Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Commodities Strategy.
Diversification Opportunities for NYSE Composite and Commodities Strategy
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Commodities is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Commodities Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodities 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 Commodities Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodities Strategy has no effect on the direction of NYSE Composite i.e., NYSE Composite and Commodities Strategy go up and down completely randomly.
Pair Corralation between NYSE Composite and Commodities Strategy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.63 times more return on investment than Commodities Strategy. However, NYSE Composite is 1.58 times less risky than Commodities Strategy. It trades about 0.42 of its potential returns per unit of risk. Commodities Strategy Fund is currently generating about -0.03 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Commodities Strategy Fund
Performance |
| Timeline |
NYSE Composite and Commodities Strategy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Commodities Strategy Fund
Pair trading matchups for Commodities Strategy
Pair Trading with NYSE Composite and Commodities Strategy
The main advantage of trading using opposite NYSE Composite and Commodities Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Commodities Strategy 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 Commodities Strategy will offset losses from the drop in Commodities Strategy's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Banking Fund Class | Commodities Strategy vs. Basic Materials Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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