Correlation Between NYSE Composite and Stratasys
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Stratasys 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 Stratasys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Stratasys, you can compare the effects of market volatilities on NYSE Composite and Stratasys 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 Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Stratasys.
Diversification Opportunities for NYSE Composite and Stratasys
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Stratasys is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of NYSE Composite i.e., NYSE Composite and Stratasys go up and down completely randomly.
Pair Corralation between NYSE Composite and Stratasys
Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.05 times less return on investment than Stratasys. But when comparing it to its historical volatility, NYSE Composite is 9.4 times less risky than Stratasys. It trades about 0.24 of its potential returns per unit of risk. Stratasys is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 770.00 in Stratasys on August 27, 2024 and sell it today you would earn a total of 206.00 from holding Stratasys or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Stratasys
Performance |
| Timeline |
NYSE Composite and Stratasys Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Stratasys
Pair trading matchups for Stratasys
Pair Trading with NYSE Composite and Stratasys
The main advantage of trading using opposite NYSE Composite and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Stratasys vs. D Wave Quantum | Stratasys vs. Rigetti Computing | Stratasys vs. Cricut Inc | Stratasys vs. Quantum Computing |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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