Correlation Between NYSE Composite and Alimentation Couchen

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

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

Diversification Opportunities for NYSE Composite and Alimentation Couchen

0.57

Correlation Coefficient

NYSE Composite  Alimentation Couchen

Very weak diversification

The 3 months correlation between NYSE and Alimentation is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard 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 Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of NYSE Composite i.e., NYSE Composite and Alimentation Couchen go up and down completely randomly.

Pair Corralation between NYSE Composite and Alimentation Couchen

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.48 times more return on investment than Alimentation Couchen. However, NYSE Composite is 2.08 times less risky than Alimentation Couchen. It trades about 0.0 of its potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.0 per unit of risk. If you would invest  1,966,458  in NYSE Composite on October 22, 2024 and sell it today you would lose (5,721) from holding NYSE Composite or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NYSE Composite  vs.  Alimentation Couchen Tard

Pair Trading with NYSE Composite and Alimentation Couchen

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

The idea behind NYSE Composite and Alimentation Couchen Tard 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.