Correlation Between NYSE Composite and Ensysce Biosciences

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

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

Diversification Opportunities for NYSE Composite and Ensysce Biosciences

-0.27

Correlation Coefficient

NYSE Composite  Ensysce Biosciences

Very good diversification

The 3 months correlation between NYSE and Ensysce is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ensysce Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensysce Biosciences 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 Ensysce Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensysce Biosciences has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ensysce Biosciences go up and down completely randomly.

Pair Corralation between NYSE Composite and Ensysce Biosciences

Assuming the 90 days trading horizon NYSE Composite is expected to generate 159.92 times less return on investment than Ensysce Biosciences. But when comparing it to its historical volatility, NYSE Composite is 84.91 times less risky than Ensysce Biosciences. It trades about 0.07 of its potential returns per unit of risk. Ensysce Biosciences is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Ensysce Biosciences on September 22, 2024 and sell it today you would lose (1.30) from holding Ensysce Biosciences or give up 59.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.54%
Values	Daily Returns

NYSE Composite  vs.  Ensysce Biosciences

Pair Trading with NYSE Composite and Ensysce Biosciences

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

The idea behind NYSE Composite and Ensysce Biosciences 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.