Correlation Between NYSE Composite and Guggenheim Small
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Guggenheim Small 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 Guggenheim Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Guggenheim Small Cap, you can compare the effects of market volatilities on NYSE Composite and Guggenheim Small 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 Guggenheim Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Guggenheim Small.
Diversification Opportunities for NYSE Composite and Guggenheim Small
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Guggenheim is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Guggenheim Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Small Cap 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 Guggenheim Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Small Cap has no effect on the direction of NYSE Composite i.e., NYSE Composite and Guggenheim Small go up and down completely randomly.
Pair Corralation between NYSE Composite and Guggenheim Small
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.67 times more return on investment than Guggenheim Small. However, NYSE Composite is 1.5 times less risky than Guggenheim Small. It trades about 0.13 of its potential returns per unit of risk. Guggenheim Small Cap is currently generating about 0.06 per unit of risk. If you would invest 1,588,163 in NYSE Composite on September 14, 2024 and sell it today you would earn a total of 388,746 from holding NYSE Composite or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.57% |
| Values | Daily Returns |
NYSE Composite vs. Guggenheim Small Cap
Performance |
| Timeline |
NYSE Composite and Guggenheim Small Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Guggenheim Small Cap
Pair trading matchups for Guggenheim Small
Pair Trading with NYSE Composite and Guggenheim Small
The main advantage of trading using opposite NYSE Composite and Guggenheim Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Guggenheim Small 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 Guggenheim Small will offset losses from the drop in Guggenheim Small's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Guggenheim Small vs. Putnam Money Market | Guggenheim Small vs. Edward Jones Money | Guggenheim Small vs. Ab Government Exchange | Guggenheim Small vs. Prudential Government Money |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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