Correlation Between NYSE Composite and Wormhole
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Wormhole 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 Wormhole into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Wormhole, you can compare the effects of market volatilities on NYSE Composite and Wormhole 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 Wormhole. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Wormhole.
Diversification Opportunities for NYSE Composite and Wormhole
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Wormhole is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Wormhole in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wormhole 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 Wormhole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wormhole has no effect on the direction of NYSE Composite i.e., NYSE Composite and Wormhole go up and down completely randomly.
Pair Corralation between NYSE Composite and Wormhole
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.17 times less return on investment than Wormhole. But when comparing it to its historical volatility, NYSE Composite is 8.49 times less risky than Wormhole. It trades about 0.19 of its potential returns per unit of risk. Wormhole is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Wormhole on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Wormhole or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Wormhole
Performance |
| Timeline |
NYSE Composite and Wormhole Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Wormhole
Pair trading matchups for Wormhole
Pair Trading with NYSE Composite and Wormhole
The main advantage of trading using opposite NYSE Composite and Wormhole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Wormhole 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 Wormhole will offset losses from the drop in Wormhole'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 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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