Correlation Between NYSE Composite and Impala Platinum

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

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

Diversification Opportunities for NYSE Composite and Impala Platinum

-0.14

Correlation Coefficient

NYSE Composite  Impala Platinum

Good diversification

The 3 months correlation between NYSE and Impala is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of NYSE Composite i.e., NYSE Composite and Impala Platinum go up and down completely randomly.

Pair Corralation between NYSE Composite and Impala Platinum

Assuming the 90 days trading horizon NYSE Composite is expected to generate 33.36 times less return on investment than Impala Platinum. But when comparing it to its historical volatility, NYSE Composite is 4.08 times less risky than Impala Platinum. It trades about 0.02 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  467.00  in Impala Platinum Holdings on December 29, 2024 and sell it today you would earn a total of  207.00  from holding Impala Platinum Holdings or generate 44.33% return on investment over 90 days.

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

NYSE Composite  vs.  Impala Platinum Holdings

Pair Trading with NYSE Composite and Impala Platinum

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

The idea behind NYSE Composite and Impala Platinum Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.