Correlation Between NYSE Composite and Zacks Small-cap
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Zacks Small-cap 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 Zacks Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Zacks Small Cap E, you can compare the effects of market volatilities on NYSE Composite and Zacks Small-cap 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 Zacks Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Zacks Small-cap.
Diversification Opportunities for NYSE Composite and Zacks Small-cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Zacks is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Zacks Small Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Small Cap 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 Zacks Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Small Cap has no effect on the direction of NYSE Composite i.e., NYSE Composite and Zacks Small-cap go up and down completely randomly.
Pair Corralation between NYSE Composite and Zacks Small-cap
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.11 times less return on investment than Zacks Small-cap. But when comparing it to its historical volatility, NYSE Composite is 2.08 times less risky than Zacks Small-cap. It trades about 0.14 of its potential returns per unit of risk. Zacks Small Cap E is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,538 in Zacks Small Cap E on September 1, 2024 and sell it today you would earn a total of 462.00 from holding Zacks Small Cap E or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. Zacks Small Cap E
Performance |
| Timeline |
NYSE Composite and Zacks Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Zacks Small Cap E
Pair trading matchups for Zacks Small-cap
Pair Trading with NYSE Composite and Zacks Small-cap
The main advantage of trading using opposite NYSE Composite and Zacks Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Zacks Small-cap 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 Zacks Small-cap will offset losses from the drop in Zacks Small-cap's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Zacks Small-cap vs. Zacks Small Cap E | Zacks Small-cap vs. Towle Deep Value | Zacks Small-cap vs. Prudential Qma Small Cap | Zacks Small-cap vs. Paradigm Micro Cap Fund |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |