Correlation Between NYSE Composite and SCE Trust
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SCE Trust 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 SCE Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SCE Trust V, you can compare the effects of market volatilities on NYSE Composite and SCE Trust 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 SCE Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SCE Trust.
Diversification Opportunities for NYSE Composite and SCE Trust
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and SCE is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SCE Trust V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCE Trust V 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 SCE Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCE Trust V has no effect on the direction of NYSE Composite i.e., NYSE Composite and SCE Trust go up and down completely randomly.
Pair Corralation between NYSE Composite and SCE Trust
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.33 times more return on investment than SCE Trust. However, NYSE Composite is 1.33 times more volatile than SCE Trust V. It trades about 0.0 of its potential returns per unit of risk. SCE Trust V is currently generating about -0.04 per unit of risk. If you would invest 1,852,509 in NYSE Composite on January 11, 2025 and sell it today you would lose (30,544) from holding NYSE Composite or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
NYSE Composite vs. SCE Trust V
Performance |
| Timeline |
NYSE Composite and SCE Trust Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SCE Trust V
Pair trading matchups for SCE Trust
Pair Trading with NYSE Composite and SCE Trust
The main advantage of trading using opposite NYSE Composite and SCE Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SCE Trust 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 SCE Trust will offset losses from the drop in SCE Trust's long position.| NYSE Composite vs. Canaf Investments | NYSE Composite vs. Aegon NV ADR | NYSE Composite vs. Athene Holding | NYSE Composite vs. NorthWestern |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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