Correlation Between NYSE Composite and Atico Mining

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

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

Diversification Opportunities for NYSE Composite and Atico Mining

0.61

Correlation Coefficient

NYSE Composite  Atico Mining

Poor diversification

The 3 months correlation between NYSE and Atico is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining 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 Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of NYSE Composite i.e., NYSE Composite and Atico Mining go up and down completely randomly.

Pair Corralation between NYSE Composite and Atico Mining

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Atico Mining. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 10.28 times less risky than Atico Mining. The index trades about -0.02 of its potential returns per unit of risk. The Atico Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Atico Mining on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Atico Mining or generate 0.0% return on investment over 90 days.

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

NYSE Composite  vs.  Atico Mining

Pair Trading with NYSE Composite and Atico Mining

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

The idea behind NYSE Composite and Atico Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.