Correlation Between NYSE Composite and Income Stock
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Income Stock 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 Income Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Income Stock Fund, you can compare the effects of market volatilities on NYSE Composite and Income Stock 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 Income Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Income Stock.
Diversification Opportunities for NYSE Composite and Income Stock
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Income is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock 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 Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of NYSE Composite i.e., NYSE Composite and Income Stock go up and down completely randomly.
Pair Corralation between NYSE Composite and Income Stock
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.89 times more return on investment than Income Stock. However, NYSE Composite is 1.12 times less risky than Income Stock. It trades about 0.08 of its potential returns per unit of risk. Income Stock Fund is currently generating about 0.05 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Income Stock Fund
Performance |
| Timeline |
NYSE Composite and Income Stock Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Income Stock Fund
Pair trading matchups for Income Stock
Pair Trading with NYSE Composite and Income Stock
The main advantage of trading using opposite NYSE Composite and Income Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Income Stock 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 Income Stock will offset losses from the drop in Income Stock's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Income Stock vs. Dunham High Yield | Income Stock vs. Pioneer High Yield | Income Stock vs. Pimco High Yield | Income Stock vs. Lord Abbett High |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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