Correlation Between NYSE Composite and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Sp Smallcap 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 Sp Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sp Smallcap Index, you can compare the effects of market volatilities on NYSE Composite and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sp Smallcap.
Diversification Opportunities for NYSE Composite and Sp Smallcap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and SMCIX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sp Smallcap go up and down completely randomly.
Pair Corralation between NYSE Composite and Sp Smallcap
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than Sp Smallcap. However, NYSE Composite is 3.96 times less risky than Sp Smallcap. It trades about 0.42 of its potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.05 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Sp Smallcap Index
Performance |
| Timeline |
NYSE Composite and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sp Smallcap Index
Pair trading matchups for Sp Smallcap
Pair Trading with NYSE Composite and Sp Smallcap
The main advantage of trading using opposite NYSE Composite and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Sp Smallcap vs. Sp Midcap Index | Sp Smallcap vs. Sp 500 Index | Sp Smallcap vs. Nasdaq 100 Index Fund | Sp Smallcap vs. Deutsche Sp 500 |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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