Correlation Between NYSE Composite and Standard
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Standard 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 Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Standard Motor Products, you can compare the effects of market volatilities on NYSE Composite and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Standard.
Diversification Opportunities for NYSE Composite and Standard
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Standard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of NYSE Composite i.e., NYSE Composite and Standard go up and down completely randomly.
Pair Corralation between NYSE Composite and Standard
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.24 times more return on investment than Standard. However, NYSE Composite is 4.12 times less risky than Standard. It trades about 0.05 of its potential returns per unit of risk. Standard Motor Products is currently generating about 0.0 per unit of risk. If you would invest 1,948,179 in NYSE Composite on November 1, 2024 and sell it today you would earn a total of 44,568 from holding NYSE Composite or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Standard Motor Products
Performance |
| Timeline |
NYSE Composite and Standard Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Standard Motor Products
Pair trading matchups for Standard
Pair Trading with NYSE Composite and Standard
The main advantage of trading using opposite NYSE Composite and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| NYSE Composite vs. Pembina Pipeline | NYSE Composite vs. Precision Drilling | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Transocean |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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