Correlation Between NYSE Composite and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Strategic 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 Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federated Strategic Value, you can compare the effects of market volatilities on NYSE Composite and Federated Strategic 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 Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Strategic.
Diversification Opportunities for NYSE Composite and Federated Strategic
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value 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 Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Strategic go up and down completely randomly.
Pair Corralation between NYSE Composite and Federated Strategic
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.29 times more return on investment than Federated Strategic. However, NYSE Composite is 1.29 times more volatile than Federated Strategic Value. It trades about 0.26 of its potential returns per unit of risk. Federated Strategic Value is currently generating about 0.23 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Federated Strategic Value
Performance |
| Timeline |
NYSE Composite and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federated Strategic Value
Pair trading matchups for Federated Strategic
Pair Trading with NYSE Composite and Federated Strategic
The main advantage of trading using opposite NYSE Composite and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Federated Strategic vs. T Rowe Price | Federated Strategic vs. Commonwealth Real Estate | Federated Strategic vs. Virtus Real Estate | Federated Strategic vs. Morgan Stanley Institutional |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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