Correlation Between NYSE Composite and Salient Tactical
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Salient Tactical 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 Salient Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Salient Tactical Plus, you can compare the effects of market volatilities on NYSE Composite and Salient Tactical 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 Salient Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Salient Tactical.
Diversification Opportunities for NYSE Composite and Salient Tactical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Salient is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Salient Tactical Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Tactical Plus 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 Salient Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Tactical Plus has no effect on the direction of NYSE Composite i.e., NYSE Composite and Salient Tactical go up and down completely randomly.
Pair Corralation between NYSE Composite and Salient Tactical
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.26 times more return on investment than Salient Tactical. However, NYSE Composite is 2.26 times more volatile than Salient Tactical Plus. It trades about 0.07 of its potential returns per unit of risk. Salient Tactical Plus is currently generating about 0.04 per unit of risk. If you would invest 1,605,225 in NYSE Composite on November 2, 2024 and sell it today you would earn a total of 394,657 from holding NYSE Composite or generate 24.59% 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. Salient Tactical Plus
Performance |
| Timeline |
NYSE Composite and Salient Tactical Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Salient Tactical Plus
Pair trading matchups for Salient Tactical
Pair Trading with NYSE Composite and Salient Tactical
The main advantage of trading using opposite NYSE Composite and Salient Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Salient Tactical 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 Salient Tactical will offset losses from the drop in Salient Tactical's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| Salient Tactical vs. Global Diversified Income | Salient Tactical vs. Gmo Quality Fund | Salient Tactical vs. Jhancock Diversified Macro | Salient Tactical vs. Aqr Diversified Arbitrage |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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