Correlation Between NYSE Composite and Western Bulk
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Western Bulk 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 Western Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Western Bulk Chartering, you can compare the effects of market volatilities on NYSE Composite and Western Bulk 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 Western Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Western Bulk.
Diversification Opportunities for NYSE Composite and Western Bulk
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Western is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Western Bulk Chartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Bulk Chartering 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 Western Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Bulk Chartering has no effect on the direction of NYSE Composite i.e., NYSE Composite and Western Bulk go up and down completely randomly.
Pair Corralation between NYSE Composite and Western Bulk
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.1 times more return on investment than Western Bulk. However, NYSE Composite is 10.26 times less risky than Western Bulk. It trades about 0.26 of its potential returns per unit of risk. Western Bulk Chartering is currently generating about -0.25 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Western Bulk Chartering
Performance |
| Timeline |
NYSE Composite and Western Bulk Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Western Bulk Chartering
Pair trading matchups for Western Bulk
Pair Trading with NYSE Composite and Western Bulk
The main advantage of trading using opposite NYSE Composite and Western Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Western Bulk 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 Western Bulk will offset losses from the drop in Western Bulk's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Western Bulk vs. SITC International Holdings | Western Bulk vs. Pacific Basin Shipping | Western Bulk vs. SITC International Holdings | Western Bulk vs. Mitsui OSK Lines |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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