Correlation Between NYSE Composite and Schwab 5
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Schwab 5 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 Schwab 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Schwab 5 10 Year, you can compare the effects of market volatilities on NYSE Composite and Schwab 5 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 Schwab 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Schwab 5.
Diversification Opportunities for NYSE Composite and Schwab 5
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Schwab is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Schwab 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab 5 10 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 Schwab 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab 5 10 has no effect on the direction of NYSE Composite i.e., NYSE Composite and Schwab 5 go up and down completely randomly.
Pair Corralation between NYSE Composite and Schwab 5
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.9 times more return on investment than Schwab 5. However, NYSE Composite is 1.9 times more volatile than Schwab 5 10 Year. It trades about 0.0 of its potential returns per unit of risk. Schwab 5 10 Year is currently generating about -0.04 per unit of risk. If you would invest 1,966,458 in NYSE Composite on October 22, 2024 and sell it today you would lose (5,721) from holding NYSE Composite or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Schwab 5 10 Year
Performance |
| Timeline |
NYSE Composite and Schwab 5 Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Schwab 5 10 Year
Pair trading matchups for Schwab 5
Pair Trading with NYSE Composite and Schwab 5
The main advantage of trading using opposite NYSE Composite and Schwab 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Schwab 5 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 Schwab 5 will offset losses from the drop in Schwab 5's long position.| NYSE Composite vs. Kenon Holdings | NYSE Composite vs. Procter Gamble | NYSE Composite vs. Broadcom | NYSE Composite vs. Nike Inc |
| Schwab 5 vs. Schwab 1 5 Year | Schwab 5 vs. Schwab Long Term Treasury | Schwab 5 vs. Schwab Intermediate Term Treasury | Schwab 5 vs. Schwab Short Term Treasury |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |