Correlation Between NYSE Composite and Soundwatch Hedged
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Soundwatch Hedged 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 Soundwatch Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Soundwatch Hedged Equity, you can compare the effects of market volatilities on NYSE Composite and Soundwatch Hedged 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 Soundwatch Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Soundwatch Hedged.
Diversification Opportunities for NYSE Composite and Soundwatch Hedged
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Soundwatch is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Soundwatch Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soundwatch Hedged Equity 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 Soundwatch Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soundwatch Hedged Equity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Soundwatch Hedged go up and down completely randomly.
Pair Corralation between NYSE Composite and Soundwatch Hedged
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.0 times more return on investment than Soundwatch Hedged. However, NYSE Composite is 1.0 times less risky than Soundwatch Hedged. It trades about 0.24 of its potential returns per unit of risk. Soundwatch Hedged Equity is currently generating about 0.17 per unit of risk. If you would invest 1,945,627 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 66,718 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Soundwatch Hedged Equity
Performance |
| Timeline |
NYSE Composite and Soundwatch Hedged Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Soundwatch Hedged Equity
Pair trading matchups for Soundwatch Hedged
Pair Trading with NYSE Composite and Soundwatch Hedged
The main advantage of trading using opposite NYSE Composite and Soundwatch Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Soundwatch Hedged 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 Soundwatch Hedged will offset losses from the drop in Soundwatch Hedged'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 |
| Soundwatch Hedged vs. FT Vest Equity | Soundwatch Hedged vs. Northern Lights | Soundwatch Hedged vs. Dimensional International High | Soundwatch Hedged vs. First Trust Exchange Traded |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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