Correlation Between NYSE Composite and Solution Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Solution Financial 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 Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Solution Financial, you can compare the effects of market volatilities on NYSE Composite and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Solution Financial.
Diversification Opportunities for NYSE Composite and Solution Financial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Solution is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of NYSE Composite i.e., NYSE Composite and Solution Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and Solution Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than Solution Financial. However, NYSE Composite is 4.07 times less risky than Solution Financial. It trades about 0.29 of its potential returns per unit of risk. Solution Financial is currently generating about 0.01 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 79,355 from holding NYSE Composite or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Solution Financial
Performance |
| Timeline |
NYSE Composite and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Solution Financial
Pair trading matchups for Solution Financial
Pair Trading with NYSE Composite and Solution Financial
The main advantage of trading using opposite NYSE Composite and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial vs. BOC Aviation Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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