Correlation Between NYSE Composite and Templeton Dragon
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Templeton Dragon 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 Templeton Dragon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Templeton Dragon Closed, you can compare the effects of market volatilities on NYSE Composite and Templeton Dragon 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 Templeton Dragon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Templeton Dragon.
Diversification Opportunities for NYSE Composite and Templeton Dragon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Templeton is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Templeton Dragon Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Dragon Closed 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 Templeton Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Dragon Closed has no effect on the direction of NYSE Composite i.e., NYSE Composite and Templeton Dragon go up and down completely randomly.
Pair Corralation between NYSE Composite and Templeton Dragon
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.45 times more return on investment than Templeton Dragon. However, NYSE Composite is 2.25 times less risky than Templeton Dragon. It trades about 0.08 of its potential returns per unit of risk. Templeton Dragon Closed is currently generating about -0.01 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% 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. Templeton Dragon Closed
Performance |
| Timeline |
NYSE Composite and Templeton Dragon Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Templeton Dragon Closed
Pair trading matchups for Templeton Dragon
Pair Trading with NYSE Composite and Templeton Dragon
The main advantage of trading using opposite NYSE Composite and Templeton Dragon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Templeton Dragon 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 Templeton Dragon will offset losses from the drop in Templeton Dragon's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Templeton Dragon vs. Nuveen Municipalome | Templeton Dragon vs. Western Asset Investment | Templeton Dragon vs. Templeton Emerging Markets | Templeton Dragon vs. Tekla Life Sciences |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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