Correlation Between NYSE Composite and Upbound
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Upbound 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 Upbound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Upbound Group, you can compare the effects of market volatilities on NYSE Composite and Upbound 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 Upbound. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Upbound.
Diversification Opportunities for NYSE Composite and Upbound
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Upbound is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Upbound go up and down completely randomly.
Pair Corralation between NYSE Composite and Upbound
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than Upbound. However, NYSE Composite is 3.58 times less risky than Upbound. It trades about -0.02 of its potential returns per unit of risk. Upbound Group is currently generating about -0.24 per unit of risk. If you would invest 1,998,000 in NYSE Composite on November 28, 2024 and sell it today you would lose (5,595) from holding NYSE Composite or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Upbound Group
Performance |
| Timeline |
NYSE Composite and Upbound Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Upbound Group
Pair trading matchups for Upbound
Pair Trading with NYSE Composite and Upbound
The main advantage of trading using opposite NYSE Composite and Upbound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Upbound 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 Upbound will offset losses from the drop in Upbound's long position.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
| Upbound vs. JBG SMITH Properties | Upbound vs. Lincoln Electric Holdings | Upbound vs. Toro Co | Upbound vs. Rocky Brands |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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