Correlation Between NYSE Composite and SP Funds
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SP Funds 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 Funds 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 Funds Dow, you can compare the effects of market volatilities on NYSE Composite and SP Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SP Funds.
Diversification Opportunities for NYSE Composite and SP Funds
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and SPSK is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SP Funds Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Funds Dow 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Funds Dow has no effect on the direction of NYSE Composite i.e., NYSE Composite and SP Funds go up and down completely randomly.
Pair Corralation between NYSE Composite and SP Funds
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.73 times more return on investment than SP Funds. However, NYSE Composite is 1.73 times more volatile than SP Funds Dow. It trades about 0.29 of its potential returns per unit of risk. SP Funds Dow is currently generating about 0.05 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 79,355 from holding NYSE Composite or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. SP Funds Dow
Performance |
| Timeline |
NYSE Composite and SP Funds Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SP Funds Dow
Pair trading matchups for SP Funds
Pair Trading with NYSE Composite and SP Funds
The main advantage of trading using opposite NYSE Composite and SP Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SP Funds 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 Funds will offset losses from the drop in SP Funds' long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| SP Funds vs. SPDR Bloomberg Short | SP Funds vs. Invesco International Corporate | SP Funds vs. SPDR Bloomberg Emerging | SP Funds vs. SPDR Nuveen Bloomberg |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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