Correlation Between NYSE Composite and Turtle Beach

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

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

Diversification Opportunities for NYSE Composite and Turtle Beach

0.45

Correlation Coefficient

NYSE Composite  Turtle Beach

Very weak diversification

The 3 months correlation between NYSE and Turtle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Turtle Beach Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turtle Beach Corp 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 Turtle Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turtle Beach Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Turtle Beach go up and down completely randomly.

Pair Corralation between NYSE Composite and Turtle Beach

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Turtle Beach. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 3.54 times less risky than Turtle Beach. The index trades about -0.36 of its potential returns per unit of risk. The Turtle Beach Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,731  in Turtle Beach Corp on September 29, 2024 and sell it today you would lose (39.00) from holding Turtle Beach Corp or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

NYSE Composite  vs.  Turtle Beach Corp

Pair Trading with NYSE Composite and Turtle Beach

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

The idea behind NYSE Composite and Turtle Beach Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.