Correlation Between NYSE Composite and Bullion Gold
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Bullion Gold 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 Bullion Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Bullion Gold Resources, you can compare the effects of market volatilities on NYSE Composite and Bullion Gold 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 Bullion Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Bullion Gold.
Diversification Opportunities for NYSE Composite and Bullion Gold
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Bullion is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Bullion Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bullion Gold Resources 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 Bullion Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bullion Gold Resources has no effect on the direction of NYSE Composite i.e., NYSE Composite and Bullion Gold go up and down completely randomly.
Pair Corralation between NYSE Composite and Bullion Gold
Assuming the 90 days trading horizon NYSE Composite is expected to generate 10.22 times less return on investment than Bullion Gold. But when comparing it to its historical volatility, NYSE Composite is 17.28 times less risky than Bullion Gold. It trades about 0.08 of its potential returns per unit of risk. Bullion Gold Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.98 in Bullion Gold Resources on September 3, 2024 and sell it today you would lose (1.14) from holding Bullion Gold Resources or give up 38.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
NYSE Composite vs. Bullion Gold Resources
Performance |
| Timeline |
NYSE Composite and Bullion Gold Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Bullion Gold Resources
Pair trading matchups for Bullion Gold
Pair Trading with NYSE Composite and Bullion Gold
The main advantage of trading using opposite NYSE Composite and Bullion Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Bullion Gold 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 Bullion Gold will offset losses from the drop in Bullion Gold's long position.| NYSE Composite vs. Lindblad Expeditions Holdings | NYSE Composite vs. LB Foster | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Bridgford Foods |
| Bullion Gold vs. Qubec Nickel Corp | Bullion Gold vs. IGO Limited | Bullion Gold vs. Avarone Metals | Bullion Gold vs. Adriatic Metals PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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