Correlation Between NYSE Composite and Universal Stainless
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Universal Stainless 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 Universal Stainless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Universal Stainless Alloy, you can compare the effects of market volatilities on NYSE Composite and Universal Stainless 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 Universal Stainless. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Universal Stainless.
Diversification Opportunities for NYSE Composite and Universal Stainless
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of NYSE Composite i.e., NYSE Composite and Universal Stainless go up and down completely randomly.
Pair Corralation between NYSE Composite and Universal Stainless
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.86 times less return on investment than Universal Stainless. But when comparing it to its historical volatility, NYSE Composite is 3.24 times less risky than Universal Stainless. It trades about 0.14 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,021 in Universal Stainless Alloy on August 27, 2024 and sell it today you would earn a total of 413.00 from holding Universal Stainless Alloy or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Universal Stainless Alloy
Performance |
| Timeline |
NYSE Composite and Universal Stainless Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Universal Stainless Alloy
Pair trading matchups for Universal Stainless
Pair Trading with NYSE Composite and Universal Stainless
The main advantage of trading using opposite NYSE Composite and Universal Stainless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Universal Stainless 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 Universal Stainless will offset losses from the drop in Universal Stainless' long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Universal Stainless vs. Olympic Steel | Universal Stainless vs. Outokumpu Oyj ADR | Universal Stainless vs. Usinas Siderurgicas de | Universal Stainless vs. POSCO Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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