Correlation Between NYSE Composite and AMERICAN
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By analyzing existing cross correlation between NYSE Composite and AMERICAN HONDA FINANCE, you can compare the effects of market volatilities on NYSE Composite and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and AMERICAN.
Diversification Opportunities for NYSE Composite and AMERICAN
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and AMERICAN is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and AMERICAN HONDA FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN HONDA FINANCE 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN HONDA FINANCE has no effect on the direction of NYSE Composite i.e., NYSE Composite and AMERICAN go up and down completely randomly.
Pair Corralation between NYSE Composite and AMERICAN
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.81 times more return on investment than AMERICAN. However, NYSE Composite is 1.24 times less risky than AMERICAN. It trades about -0.05 of its potential returns per unit of risk. AMERICAN HONDA FINANCE is currently generating about -0.18 per unit of risk. If you would invest 1,998,000 in NYSE Composite on November 27, 2024 and sell it today you would lose (12,080) from holding NYSE Composite or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
NYSE Composite vs. AMERICAN HONDA FINANCE
Performance |
| Timeline |
NYSE Composite and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
AMERICAN HONDA FINANCE
Pair trading matchups for AMERICAN
Pair Trading with NYSE Composite and AMERICAN
The main advantage of trading using opposite NYSE Composite and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| NYSE Composite vs. Unum Group | NYSE Composite vs. Palomar Holdings | NYSE Composite vs. Fidelity National Financial | NYSE Composite vs. ZW Data Action |
| AMERICAN vs. Games Workshop Group | AMERICAN vs. Take Two Interactive Software | AMERICAN vs. Bilibili | AMERICAN vs. Galaxy Gaming |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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