Correlation Between NYSE Composite and MDJM
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and MDJM 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 MDJM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and MDJM, you can compare the effects of market volatilities on NYSE Composite and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and MDJM.
Diversification Opportunities for NYSE Composite and MDJM
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and MDJM is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of NYSE Composite i.e., NYSE Composite and MDJM go up and down completely randomly.
Pair Corralation between NYSE Composite and MDJM
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the MDJM. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 15.85 times less risky than MDJM. The index trades about -0.03 of its potential returns per unit of risk. The MDJM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16.00 in MDJM on October 28, 2024 and sell it today you would earn a total of 1.00 from holding MDJM or generate 6.25% 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. MDJM
Performance |
| Timeline |
NYSE Composite and MDJM Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
MDJM
Pair trading matchups for MDJM
Pair Trading with NYSE Composite and MDJM
The main advantage of trading using opposite NYSE Composite and MDJM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, MDJM 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 MDJM will offset losses from the drop in MDJM's long position.| NYSE Composite vs. United Parks Resorts | NYSE Composite vs. Paranovus Entertainment Technology | NYSE Composite vs. FitLife Brands, Common | NYSE Composite vs. Sphere Entertainment Co |
| MDJM vs. Nasdaq Inc | MDJM vs. Definitive Healthcare Corp | MDJM vs. SmartStop Self Storage | MDJM vs. Cadence Design 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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