Correlation Between NYSE Composite and Santeon
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Santeon 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 Santeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Santeon Group, you can compare the effects of market volatilities on NYSE Composite and Santeon 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 Santeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Santeon.
Diversification Opportunities for NYSE Composite and Santeon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Santeon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Santeon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santeon Group 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 Santeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santeon Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Santeon go up and down completely randomly.
Pair Corralation between NYSE Composite and Santeon
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.19 times more return on investment than Santeon. However, NYSE Composite is 5.4 times less risky than Santeon. It trades about 0.24 of its potential returns per unit of risk. Santeon Group is currently generating about -0.21 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Santeon Group
Performance |
| Timeline |
NYSE Composite and Santeon Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Santeon Group
Pair trading matchups for Santeon
Pair Trading with NYSE Composite and Santeon
The main advantage of trading using opposite NYSE Composite and Santeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Santeon 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 Santeon will offset losses from the drop in Santeon's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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