Correlation Between NYSE Composite and Swire Pacific
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Swire Pacific 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 Swire Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Swire Pacific, you can compare the effects of market volatilities on NYSE Composite and Swire Pacific 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 Swire Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Swire Pacific.
Diversification Opportunities for NYSE Composite and Swire Pacific
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Swire is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Swire Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific 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 Swire Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Pacific has no effect on the direction of NYSE Composite i.e., NYSE Composite and Swire Pacific go up and down completely randomly.
Pair Corralation between NYSE Composite and Swire Pacific
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.14 times less return on investment than Swire Pacific. But when comparing it to its historical volatility, NYSE Composite is 2.64 times less risky than Swire Pacific. It trades about 0.11 of its potential returns per unit of risk. Swire Pacific is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 637.00 in Swire Pacific on August 29, 2024 and sell it today you would earn a total of 189.00 from holding Swire Pacific or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Swire Pacific
Performance |
| Timeline |
NYSE Composite and Swire Pacific Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Swire Pacific
Pair trading matchups for Swire Pacific
Pair Trading with NYSE Composite and Swire Pacific
The main advantage of trading using opposite NYSE Composite and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Swire Pacific 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 Swire Pacific will offset losses from the drop in Swire Pacific's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Swire Pacific vs. CK Hutchison Holdings | Swire Pacific vs. Marubeni | Swire Pacific vs. Sumitomo Corp ADR | Swire Pacific vs. Marubeni Corp ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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