Correlation Between NYSE Composite and Codorus Valley

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

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

Diversification Opportunities for NYSE Composite and Codorus Valley

-0.33

Correlation Coefficient

NYSE Composite  Codorus Valley

Very good diversification

The 3 months correlation between NYSE and Codorus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Codorus Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codorus Valley Bancorp 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 Codorus Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codorus Valley Bancorp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Codorus Valley go up and down completely randomly.

Pair Corralation between NYSE Composite and Codorus Valley

If you would invest  2,404  in Codorus Valley Bancorp on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Codorus Valley Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

NYSE Composite  vs.  Codorus Valley Bancorp

Pair Trading with NYSE Composite and Codorus Valley

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

The idea behind NYSE Composite and Codorus Valley Bancorp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.