Correlation Between NYSE Composite and Anthera Pharmaceuticals

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

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

Diversification Opportunities for NYSE Composite and Anthera Pharmaceuticals

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Correlation Coefficient

NYSE Composite  Anthera Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between NYSE and Anthera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Anthera Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anthera Pharmaceuticals 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 Anthera Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anthera Pharmaceuticals has no effect on the direction of NYSE Composite i.e., NYSE Composite and Anthera Pharmaceuticals go up and down completely randomly.

Pair Corralation between NYSE Composite and Anthera Pharmaceuticals

If you would invest  1,956,073  in NYSE Composite on October 24, 2024 and sell it today you would earn a total of  33,286  from holding NYSE Composite or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

NYSE Composite  vs.  Anthera Pharmaceuticals

Pair Trading with NYSE Composite and Anthera Pharmaceuticals

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

The idea behind NYSE Composite and Anthera Pharmaceuticals 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.