Correlation Between NYSE Composite and Textron
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Textron 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 Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Textron, you can compare the effects of market volatilities on NYSE Composite and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Textron.
Diversification Opportunities for NYSE Composite and Textron
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Textron is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of NYSE Composite i.e., NYSE Composite and Textron go up and down completely randomly.
Pair Corralation between NYSE Composite and Textron
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.29 times more return on investment than Textron. However, NYSE Composite is 3.41 times less risky than Textron. It trades about 0.13 of its potential returns per unit of risk. Textron is currently generating about -0.06 per unit of risk. If you would invest 1,959,424 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 37,406 from holding NYSE Composite or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Textron
Performance |
| Timeline |
NYSE Composite and Textron Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Textron
Pair trading matchups for Textron
Pair Trading with NYSE Composite and Textron
The main advantage of trading using opposite NYSE Composite and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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