Correlation Between NYSE Composite and CCC Intelligent

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

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

Diversification Opportunities for NYSE Composite and CCC Intelligent

0.01

Correlation Coefficient

NYSE Composite  CCC Intelligent

Significant diversification

The 3 months correlation between NYSE and CCC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and CCC Intelligent Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCC Intelligent Solutions 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 CCC Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCC Intelligent Solutions has no effect on the direction of NYSE Composite i.e., NYSE Composite and CCC Intelligent go up and down completely randomly.

Pair Corralation between NYSE Composite and CCC Intelligent

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.59 times more return on investment than CCC Intelligent. However, NYSE Composite is 1.69 times less risky than CCC Intelligent. It trades about 0.05 of its potential returns per unit of risk. CCC Intelligent Solutions is currently generating about -0.35 per unit of risk. If you would invest  1,911,944  in NYSE Composite on December 20, 2024 and sell it today you would earn a total of  41,783  from holding NYSE Composite or generate 2.19% return on investment over 90 days.

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

NYSE Composite  vs.  CCC Intelligent Solutions

Pair Trading with NYSE Composite and CCC Intelligent

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

The idea behind NYSE Composite and CCC Intelligent Solutions 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.