Correlation Between NYSE Composite and Thales SA
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Thales SA 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 Thales SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Thales SA ADR, you can compare the effects of market volatilities on NYSE Composite and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Thales SA.
Diversification Opportunities for NYSE Composite and Thales SA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NYSE and Thales is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA ADR 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and Thales SA go up and down completely randomly.
Pair Corralation between NYSE Composite and Thales SA
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.46 times more return on investment than Thales SA. However, NYSE Composite is 2.18 times less risky than Thales SA. It trades about 0.08 of its potential returns per unit of risk. Thales SA ADR is currently generating about 0.04 per unit of risk. If you would invest 1,531,179 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 490,857 from holding NYSE Composite or generate 32.06% 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. Thales SA ADR
Performance |
| Timeline |
NYSE Composite and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Thales SA ADR
Pair trading matchups for Thales SA
Pair Trading with NYSE Composite and Thales SA
The main advantage of trading using opposite NYSE Composite and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Thales SA vs. Moog Inc | Thales SA vs. BAE Systems PLC | Thales SA vs. Park Electrochemical | Thales SA vs. Triumph Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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