Correlation Between NYSE Composite and Supernova Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Supernova Energy 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 Supernova Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Supernova Energy, you can compare the effects of market volatilities on NYSE Composite and Supernova Energy 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 Supernova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Supernova Energy.
Diversification Opportunities for NYSE Composite and Supernova Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Supernova is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy 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 Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of NYSE Composite i.e., NYSE Composite and Supernova Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and Supernova Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.55 times less return on investment than Supernova Energy. But when comparing it to its historical volatility, NYSE Composite is 22.31 times less risky than Supernova Energy. It trades about 0.11 of its potential returns per unit of risk. Supernova Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.30 in Supernova Energy on September 12, 2024 and sell it today you would lose (0.27) from holding Supernova Energy or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Supernova Energy
Performance |
| Timeline |
NYSE Composite and Supernova Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Supernova Energy
Pair trading matchups for Supernova Energy
Pair Trading with NYSE Composite and Supernova Energy
The main advantage of trading using opposite NYSE Composite and Supernova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Supernova Energy 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 Supernova Energy will offset losses from the drop in Supernova Energy's long position.| NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
| Supernova Energy vs. POSCO Holdings | Supernova Energy vs. Schweizerische Nationalbank | Supernova Energy vs. Berkshire Hathaway | Supernova Energy vs. Berkshire Hathaway |
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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