Correlation Between NYSE Composite and Altimmune

Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Altimmune 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 Altimmune into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NYSE Composite and Altimmune, you can compare the effects of market volatilities on NYSE Composite and Altimmune 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 Altimmune. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Altimmune.

Diversification Opportunities for NYSE Composite and Altimmune

0.55

Correlation Coefficient

NYSE Composite  Altimmune

Very weak diversification

The 3 months correlation between NYSE and Altimmune is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune 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 Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of NYSE Composite i.e., NYSE Composite and Altimmune go up and down completely randomly.

Pair Corralation between NYSE Composite and Altimmune

Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.46 times less return on investment than Altimmune. But when comparing it to its historical volatility, NYSE Composite is 10.34 times less risky than Altimmune. It trades about 0.1 of its potential returns per unit of risk. Altimmune is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  311.00  in Altimmune on September 23, 2024 and sell it today you would earn a total of  514.00  from holding Altimmune or generate 165.27% 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.  Altimmune

Pair Trading with NYSE Composite and Altimmune

The main advantage of trading using opposite NYSE Composite and Altimmune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Altimmune 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 Altimmune will offset losses from the drop in Altimmune's long position.

The idea behind NYSE Composite and Altimmune pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.