Correlation Between NYSE Composite and Vanguard High-yield
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Vanguard High-yield 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 Vanguard High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Vanguard High Yield Porate, you can compare the effects of market volatilities on NYSE Composite and Vanguard High-yield 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 Vanguard High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Vanguard High-yield.
Diversification Opportunities for NYSE Composite and Vanguard High-yield
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Vanguard is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Vanguard High Yield Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield 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 Vanguard High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of NYSE Composite i.e., NYSE Composite and Vanguard High-yield go up and down completely randomly.
Pair Corralation between NYSE Composite and Vanguard High-yield
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.02 times more return on investment than Vanguard High-yield. However, NYSE Composite is 4.02 times more volatile than Vanguard High Yield Porate. It trades about 0.3 of its potential returns per unit of risk. Vanguard High Yield Porate is currently generating about 0.26 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 85,577 from holding NYSE Composite or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Vanguard High Yield Porate
Performance |
| Timeline |
NYSE Composite and Vanguard High-yield Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Vanguard High Yield Porate
Pair trading matchups for Vanguard High-yield
Pair Trading with NYSE Composite and Vanguard High-yield
The main advantage of trading using opposite NYSE Composite and Vanguard High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Vanguard High-yield 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 Vanguard High-yield will offset losses from the drop in Vanguard High-yield's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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