Correlation Between NYSE Composite and Sextant International
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Sextant International 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 Sextant International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sextant International Fund, you can compare the effects of market volatilities on NYSE Composite and Sextant International 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 Sextant International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sextant International.
Diversification Opportunities for NYSE Composite and Sextant International
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Sextant is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sextant International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant International 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 Sextant International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant International has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sextant International go up and down completely randomly.
Pair Corralation between NYSE Composite and Sextant International
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.09 times less return on investment than Sextant International. But when comparing it to its historical volatility, NYSE Composite is 1.22 times less risky than Sextant International. It trades about 0.08 of its potential returns per unit of risk. Sextant International Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,754 in Sextant International Fund on September 14, 2024 and sell it today you would earn a total of 567.00 from holding Sextant International Fund or generate 32.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Sextant International Fund
Performance |
| Timeline |
NYSE Composite and Sextant International Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sextant International Fund
Pair trading matchups for Sextant International
Pair Trading with NYSE Composite and Sextant International
The main advantage of trading using opposite NYSE Composite and Sextant International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Sextant International 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 Sextant International will offset losses from the drop in Sextant International's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Sextant International vs. Sextant Growth Fund | Sextant International vs. Amana Income Fund | Sextant International vs. Amana Growth Fund | Sextant International vs. Sextant Bond Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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