Correlation Between NYSE Composite and Daiwa Securities
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Daiwa Securities 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 Daiwa Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Daiwa Securities Group, you can compare the effects of market volatilities on NYSE Composite and Daiwa Securities 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 Daiwa Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Daiwa Securities.
Diversification Opportunities for NYSE Composite and Daiwa Securities
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Daiwa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities 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 Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of NYSE Composite i.e., NYSE Composite and Daiwa Securities go up and down completely randomly.
Pair Corralation between NYSE Composite and Daiwa Securities
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.31 times more return on investment than Daiwa Securities. However, NYSE Composite is 3.2 times less risky than Daiwa Securities. It trades about -0.3 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about -0.27 per unit of risk. If you would invest 2,022,036 in NYSE Composite on September 26, 2024 and sell it today you would lose (87,888) from holding NYSE Composite or give up 4.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Daiwa Securities Group
Performance |
Timeline |
NYSE Composite and Daiwa Securities Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Daiwa Securities Group
Pair trading matchups for Daiwa Securities
Pair Trading with NYSE Composite and Daiwa Securities
The main advantage of trading using opposite NYSE Composite and Daiwa Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Daiwa Securities 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 Daiwa Securities will offset losses from the drop in Daiwa Securities' long position.NYSE Composite vs. National CineMedia | NYSE Composite vs. BCE Inc | NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Western Midstream Partners |
Daiwa Securities vs. Lindblad Expeditions Holdings | Daiwa Securities vs. Academy Sports Outdoors | Daiwa Securities vs. Coty Inc | Daiwa Securities vs. Mid Atlantic Home Health |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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