Correlation Between NYSE Composite and 1290 High
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and 1290 High 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 1290 High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and 1290 High Yield, you can compare the effects of market volatilities on NYSE Composite and 1290 High 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 1290 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and 1290 High.
Diversification Opportunities for NYSE Composite and 1290 High
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and 1290 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and 1290 High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 High Yield 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 1290 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 High Yield has no effect on the direction of NYSE Composite i.e., NYSE Composite and 1290 High go up and down completely randomly.
Pair Corralation between NYSE Composite and 1290 High
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.16 times more return on investment than 1290 High. However, NYSE Composite is 4.16 times more volatile than 1290 High Yield. It trades about 0.11 of its potential returns per unit of risk. 1290 High Yield is currently generating about 0.22 per unit of risk. If you would invest 1,766,949 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 260,255 from holding NYSE Composite or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
NYSE Composite vs. 1290 High Yield
Performance |
| Timeline |
NYSE Composite and 1290 High Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
1290 High Yield
Pair trading matchups for 1290 High
Pair Trading with NYSE Composite and 1290 High
The main advantage of trading using opposite NYSE Composite and 1290 High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, 1290 High 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 1290 High will offset losses from the drop in 1290 High's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| 1290 High vs. 1290 Funds | 1290 High vs. 1290 Essex Small | 1290 High vs. 1290 Funds | 1290 High vs. 1290 Smartbeta Equity |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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