Correlation Between NYSE Composite and Santen Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Santen Pharmaceutical 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 Santen Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Santen Pharmaceutical Co, you can compare the effects of market volatilities on NYSE Composite and Santen Pharmaceutical 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 Santen Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Santen Pharmaceutical.
Diversification Opportunities for NYSE Composite and Santen Pharmaceutical
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Santen is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Santen Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santen Pharmaceutical 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 Santen Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santen Pharmaceutical has no effect on the direction of NYSE Composite i.e., NYSE Composite and Santen Pharmaceutical go up and down completely randomly.
Pair Corralation between NYSE Composite and Santen Pharmaceutical
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.39 times less return on investment than Santen Pharmaceutical. But when comparing it to its historical volatility, NYSE Composite is 3.32 times less risky than Santen Pharmaceutical. It trades about 0.08 of its potential returns per unit of risk. Santen Pharmaceutical Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 827.00 in Santen Pharmaceutical Co on September 2, 2024 and sell it today you would earn a total of 234.00 from holding Santen Pharmaceutical Co or generate 28.3% 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. Santen Pharmaceutical Co
Performance |
| Timeline |
NYSE Composite and Santen Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Santen Pharmaceutical Co
Pair trading matchups for Santen Pharmaceutical
Pair Trading with NYSE Composite and Santen Pharmaceutical
The main advantage of trading using opposite NYSE Composite and Santen Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Santen Pharmaceutical 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 Santen Pharmaceutical will offset losses from the drop in Santen Pharmaceutical's long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Santen Pharmaceutical vs. Sanofi ADR | Santen Pharmaceutical vs. Bristol Myers Squibb | Santen Pharmaceutical vs. AstraZeneca PLC ADR | Santen Pharmaceutical vs. Gilead Sciences |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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