Correlation Between NYSE Composite and Corn Futures
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Corn Futures 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 Corn Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Corn Futures, you can compare the effects of market volatilities on NYSE Composite and Corn Futures 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 Corn Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Corn Futures.
Diversification Opportunities for NYSE Composite and Corn Futures
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Corn is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Corn Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corn Futures 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 Corn Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corn Futures has no effect on the direction of NYSE Composite i.e., NYSE Composite and Corn Futures go up and down completely randomly.
Pair Corralation between NYSE Composite and Corn Futures
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.45 times more return on investment than Corn Futures. However, NYSE Composite is 2.22 times less risky than Corn Futures. It trades about 0.13 of its potential returns per unit of risk. Corn Futures is currently generating about -0.03 per unit of risk. If you would invest 1,808,369 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 212,613 from holding NYSE Composite or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
NYSE Composite vs. Corn Futures
Performance |
| Timeline |
NYSE Composite and Corn Futures Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Corn Futures
Pair trading matchups for Corn Futures
Pair Trading with NYSE Composite and Corn Futures
The main advantage of trading using opposite NYSE Composite and Corn Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Corn Futures 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 Corn Futures will offset losses from the drop in Corn Futures' long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Corn Futures vs. Nasdaq 100 | Corn Futures vs. Oat Futures | Corn Futures vs. Wheat Futures | Corn Futures vs. Feeder Cattle Futures |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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