Correlation Between NYSE Composite and SHP ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and SHP ETF 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 SHP ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SHP ETF Trust, you can compare the effects of market volatilities on NYSE Composite and SHP ETF 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 SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SHP ETF.
Diversification Opportunities for NYSE Composite and SHP ETF
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and SHP is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and SHP ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and SHP ETF
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.15 times more return on investment than SHP ETF. However, NYSE Composite is 1.15 times more volatile than SHP ETF Trust. It trades about 0.1 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.11 per unit of risk. If you would invest 1,617,454 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 394,891 from holding NYSE Composite or generate 24.41% 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. SHP ETF Trust
Performance |
| Timeline |
NYSE Composite and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SHP ETF Trust
Pair trading matchups for SHP ETF
Pair Trading with NYSE Composite and SHP ETF
The main advantage of trading using opposite NYSE Composite and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, SHP ETF 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| SHP ETF vs. iShares Trust | SHP ETF vs. Simplify Volatility Premium | SHP ETF vs. Tidal Trust II | SHP ETF vs. SHP ETF Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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