Correlation Between NYSE Composite and Specialized Technology
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Specialized Technology 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 Specialized Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Specialized Technology Fund, you can compare the effects of market volatilities on NYSE Composite and Specialized Technology 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 Specialized Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Specialized Technology.
Diversification Opportunities for NYSE Composite and Specialized Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Specialized is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Specialized Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Specialized Technology 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 Specialized Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Specialized Technology has no effect on the direction of NYSE Composite i.e., NYSE Composite and Specialized Technology go up and down completely randomly.
Pair Corralation between NYSE Composite and Specialized Technology
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.61 times more return on investment than Specialized Technology. However, NYSE Composite is 1.65 times less risky than Specialized Technology. It trades about 0.13 of its potential returns per unit of risk. Specialized Technology Fund is currently generating about 0.08 per unit of risk. If you would invest 1,588,163 in NYSE Composite on September 14, 2024 and sell it today you would earn a total of 388,746 from holding NYSE Composite or generate 24.48% 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. Specialized Technology Fund
Performance |
| Timeline |
NYSE Composite and Specialized Technology Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Specialized Technology Fund
Pair trading matchups for Specialized Technology
Pair Trading with NYSE Composite and Specialized Technology
The main advantage of trading using opposite NYSE Composite and Specialized Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Specialized Technology 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 Specialized Technology will offset losses from the drop in Specialized Technology's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Specialized Technology vs. M Large Cap | Specialized Technology vs. Dunham Large Cap | Specialized Technology vs. Qs Large Cap | Specialized Technology vs. Transamerica Large Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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