Correlation Between NYSE Composite and Xtrackers
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Xtrackers 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 Xtrackers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Xtrackers SP 500, you can compare the effects of market volatilities on NYSE Composite and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Xtrackers.
Diversification Opportunities for NYSE Composite and Xtrackers
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Xtrackers is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of NYSE Composite i.e., NYSE Composite and Xtrackers go up and down completely randomly.
Pair Corralation between NYSE Composite and Xtrackers
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.74 times more return on investment than Xtrackers. However, NYSE Composite is 1.34 times less risky than Xtrackers. It trades about 0.26 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.14 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% 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. Xtrackers SP 500
Performance |
| Timeline |
NYSE Composite and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Xtrackers SP 500
Pair trading matchups for Xtrackers
Pair Trading with NYSE Composite and Xtrackers
The main advantage of trading using opposite NYSE Composite and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Xtrackers 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 Xtrackers will offset losses from the drop in Xtrackers' long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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