Correlation Between NYSE Composite and Sands Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Sands Capital 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 Sands Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sands Capital Global, you can compare the effects of market volatilities on NYSE Composite and Sands Capital 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 Sands Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sands Capital.
Diversification Opportunities for NYSE Composite and Sands Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Sands is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sands Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands Capital Global 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 Sands Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands Capital Global has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sands Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Sands Capital
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.22 times less return on investment than Sands Capital. But when comparing it to its historical volatility, NYSE Composite is 1.35 times less risky than Sands Capital. It trades about 0.21 of its potential returns per unit of risk. Sands Capital Global is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,100 in Sands Capital Global on August 27, 2024 and sell it today you would earn a total of 206.00 from holding Sands Capital Global or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Sands Capital Global
Performance |
| Timeline |
NYSE Composite and Sands Capital Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sands Capital Global
Pair trading matchups for Sands Capital
Pair Trading with NYSE Composite and Sands Capital
The main advantage of trading using opposite NYSE Composite and Sands Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Sands Capital 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 Sands Capital will offset losses from the drop in Sands Capital's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Sands Capital vs. Invesco Disciplined Equity | Sands Capital vs. Global Advantage Portfolio | Sands Capital vs. Global Opportunity Portfolio | Sands Capital vs. Johnson Enhanced Return |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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