Correlation Between NYSE Composite and Trinity Industries
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Trinity Industries 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 Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Trinity Industries, you can compare the effects of market volatilities on NYSE Composite and Trinity Industries 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 Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Trinity Industries.
Diversification Opportunities for NYSE Composite and Trinity Industries
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Trinity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries 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 Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of NYSE Composite i.e., NYSE Composite and Trinity Industries go up and down completely randomly.
Pair Corralation between NYSE Composite and Trinity Industries
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.97 times less return on investment than Trinity Industries. But when comparing it to its historical volatility, NYSE Composite is 3.19 times less risky than Trinity Industries. It trades about 0.08 of its potential returns per unit of risk. Trinity Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,620 in Trinity Industries on August 27, 2024 and sell it today you would earn a total of 1,167 from holding Trinity Industries or generate 44.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Trinity Industries
Performance |
| Timeline |
NYSE Composite and Trinity Industries Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Trinity Industries
Pair trading matchups for Trinity Industries
Pair Trading with NYSE Composite and Trinity Industries
The main advantage of trading using opposite NYSE Composite and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Trinity Industries 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 Trinity Industries will offset losses from the drop in Trinity Industries' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Trinity Industries vs. LB Foster | Trinity Industries vs. Freightcar America | Trinity Industries vs. Westinghouse Air Brake | Trinity Industries vs. Norfolk Southern |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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