Correlation Between NYSE Composite and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Whitehaven Coal 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 Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Whitehaven Coal Limited, you can compare the effects of market volatilities on NYSE Composite and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Whitehaven Coal.
Diversification Opportunities for NYSE Composite and Whitehaven Coal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Whitehaven is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of NYSE Composite i.e., NYSE Composite and Whitehaven Coal go up and down completely randomly.
Pair Corralation between NYSE Composite and Whitehaven Coal
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than Whitehaven Coal. However, NYSE Composite is 3.98 times less risky than Whitehaven Coal. It trades about 0.15 of its potential returns per unit of risk. Whitehaven Coal Limited is currently generating about 0.03 per unit of risk. If you would invest 1,906,443 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 115,593 from holding NYSE Composite or generate 6.06% 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. Whitehaven Coal Limited
Performance |
| Timeline |
NYSE Composite and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Whitehaven Coal Limited
Pair trading matchups for Whitehaven Coal
Pair Trading with NYSE Composite and Whitehaven Coal
The main advantage of trading using opposite NYSE Composite and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Whitehaven Coal vs. New Hope | Whitehaven Coal vs. Adaro Energy Tbk | Whitehaven Coal vs. Thungela Resources Limited | Whitehaven Coal vs. Yancoal Australia |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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