Correlation Between NYSE Composite and XVG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and XVG 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 XVG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and XVG, you can compare the effects of market volatilities on NYSE Composite and XVG 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 XVG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and XVG.
Diversification Opportunities for NYSE Composite and XVG
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and XVG is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and XVG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XVG 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 XVG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XVG has no effect on the direction of NYSE Composite i.e., NYSE Composite and XVG go up and down completely randomly.
Pair Corralation between NYSE Composite and XVG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 33.61 times less return on investment than XVG. But when comparing it to its historical volatility, NYSE Composite is 20.94 times less risky than XVG. It trades about 0.13 of its potential returns per unit of risk. XVG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.39 in XVG on August 24, 2024 and sell it today you would earn a total of 0.24 from holding XVG or generate 61.9% 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. XVG
Performance |
| Timeline |
NYSE Composite and XVG Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
XVG
Pair trading matchups for XVG
Pair Trading with NYSE Composite and XVG
The main advantage of trading using opposite NYSE Composite and XVG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, XVG 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 XVG will offset losses from the drop in XVG's long position.| NYSE Composite vs. Akanda Corp | NYSE Composite vs. Valneva SE ADR | NYSE Composite vs. Radcom | NYSE Composite vs. Western Digital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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