Correlation Between NYSE Composite and Energem Corp

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

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

Diversification Opportunities for NYSE Composite and Energem Corp

0.44

Correlation Coefficient

NYSE Composite  Energem Corp

Very weak diversification

The 3 months correlation between NYSE and Energem is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Energem Corp Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energem Corp Warrant 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 Energem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energem Corp Warrant has no effect on the direction of NYSE Composite i.e., NYSE Composite and Energem Corp go up and down completely randomly.

Pair Corralation between NYSE Composite and Energem Corp

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.09 times more return on investment than Energem Corp. However, NYSE Composite is 11.2 times less risky than Energem Corp. It trades about 0.08 of its potential returns per unit of risk. Energem Corp Warrant is currently generating about -0.3 per unit of risk. If you would invest  1,554,847  in NYSE Composite on October 3, 2024 and sell it today you would earn a total of  354,864  from holding NYSE Composite or generate 22.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.04%
Values	Daily Returns

NYSE Composite  vs.  Energem Corp Warrant

Pair Trading with NYSE Composite and Energem Corp

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

The idea behind NYSE Composite and Energem Corp Warrant 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.