Correlation Between NYSE Composite and Federated Intermediate

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federated Intermediate 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 Federated Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federated Intermediate Municipal, you can compare the effects of market volatilities on NYSE Composite and Federated Intermediate 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 Federated Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federated Intermediate.

Diversification Opportunities for NYSE Composite and Federated Intermediate

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between NYSE and Federated is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federated Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate 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 Federated Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federated Intermediate go up and down completely randomly.
    Optimize

Pair Corralation between NYSE Composite and Federated Intermediate

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Federated Intermediate. In addition to that, NYSE Composite is 3.26 times more volatile than Federated Intermediate Municipal. It trades about -0.36 of its total potential returns per unit of risk. Federated Intermediate Municipal is currently generating about -0.17 per unit of volatility. If you would invest  972.00  in Federated Intermediate Municipal on September 23, 2024 and sell it today you would lose (7.00) from holding Federated Intermediate Municipal or give up 0.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

NYSE Composite  vs.  Federated Intermediate Municip

 Performance 
       Timeline  

NYSE Composite and Federated Intermediate Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NYSE Composite and Federated Intermediate

The main advantage of trading using opposite NYSE Composite and Federated Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federated Intermediate 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 Federated Intermediate will offset losses from the drop in Federated Intermediate's long position.
The idea behind NYSE Composite and Federated Intermediate Municipal 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Share Portfolio
Track or share privately all of your investments from the convenience of any device