Correlation Between NYSE Composite and Securitas
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Securitas 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 Securitas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Securitas AB, you can compare the effects of market volatilities on NYSE Composite and Securitas 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 Securitas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Securitas.
Diversification Opportunities for NYSE Composite and Securitas
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Securitas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Securitas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Securitas AB 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 Securitas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Securitas AB has no effect on the direction of NYSE Composite i.e., NYSE Composite and Securitas go up and down completely randomly.
Pair Corralation between NYSE Composite and Securitas
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.66 times less return on investment than Securitas. But when comparing it to its historical volatility, NYSE Composite is 8.62 times less risky than Securitas. It trades about 0.08 of its potential returns per unit of risk. Securitas AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,221 in Securitas AB on September 3, 2024 and sell it today you would earn a total of 78.00 from holding Securitas AB or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 70.51% |
| Values | Daily Returns |
NYSE Composite vs. Securitas AB
Performance |
| Timeline |
NYSE Composite and Securitas Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Securitas AB
Pair trading matchups for Securitas
Pair Trading with NYSE Composite and Securitas
The main advantage of trading using opposite NYSE Composite and Securitas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Securitas 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 Securitas will offset losses from the drop in Securitas' long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Securitas vs. Apple Inc | Securitas vs. Microsoft | Securitas vs. Amazon Inc | Securitas vs. Alphabet Inc Class C |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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