Correlation Between NYSE Composite and Growth Fund
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Growth Fund 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 Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Growth Fund Investor, you can compare the effects of market volatilities on NYSE Composite and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Growth Fund.
Diversification Opportunities for NYSE Composite and Growth Fund
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Growth is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Growth Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund Investor 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund Investor has no effect on the direction of NYSE Composite i.e., NYSE Composite and Growth Fund go up and down completely randomly.
Pair Corralation between NYSE Composite and Growth Fund
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.58 times more return on investment than Growth Fund. However, NYSE Composite is 1.74 times less risky than Growth Fund. It trades about 0.24 of its potential returns per unit of risk. Growth Fund Investor is currently generating about 0.08 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% 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. Growth Fund Investor
Performance |
| Timeline |
NYSE Composite and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Growth Fund Investor
Pair trading matchups for Growth Fund
Pair Trading with NYSE Composite and Growth Fund
The main advantage of trading using opposite NYSE Composite and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund'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 |
| Growth Fund vs. Select Fund Investor | Growth Fund vs. Ultra Fund Investor | Growth Fund vs. Heritage Fund Investor | Growth Fund vs. International Growth Fund |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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