Correlation Between NYSE Composite and FundX ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and FundX ETF 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 FundX ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and FundX ETF, you can compare the effects of market volatilities on NYSE Composite and FundX ETF 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 FundX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and FundX ETF.
Diversification Opportunities for NYSE Composite and FundX ETF
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and FundX is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and FundX ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX ETF 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 FundX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and FundX ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and FundX ETF
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the FundX ETF. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.75 times less risky than FundX ETF. The index trades about -0.04 of its potential returns per unit of risk. The FundX ETF is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,163 in FundX ETF on September 13, 2024 and sell it today you would earn a total of 208.00 from holding FundX ETF or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. FundX ETF
Performance |
| Timeline |
NYSE Composite and FundX ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
FundX ETF
Pair trading matchups for FundX ETF
Pair Trading with NYSE Composite and FundX ETF
The main advantage of trading using opposite NYSE Composite and FundX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, FundX ETF 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 FundX ETF will offset losses from the drop in FundX ETF's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| FundX ETF vs. Freedom Day Dividend | FundX ETF vs. Franklin Templeton ETF | FundX ETF vs. iShares MSCI China | FundX ETF vs. Tidal Trust II |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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