Correlation Between NYSE Composite and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Plum Acquisition 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 Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Plum Acquisition Corp, you can compare the effects of market volatilities on NYSE Composite and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Plum Acquisition.
Diversification Opportunities for NYSE Composite and Plum Acquisition
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Plum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Plum Acquisition go up and down completely randomly.
Pair Corralation between NYSE Composite and Plum Acquisition
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Plum Acquisition. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 2.05 times less risky than Plum Acquisition. The index trades about -0.07 of its potential returns per unit of risk. The Plum Acquisition Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,111 in Plum Acquisition Corp on December 5, 2024 and sell it today you would lose (19.00) from holding Plum Acquisition Corp or give up 1.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Plum Acquisition Corp
Performance |
Timeline |
NYSE Composite and Plum Acquisition Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Plum Acquisition Corp
Pair trading matchups for Plum Acquisition
Pair Trading with NYSE Composite and Plum Acquisition
The main advantage of trading using opposite NYSE Composite and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Plum Acquisition 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.NYSE Composite vs. Triton International Limited | NYSE Composite vs. Mitsubishi UFJ Lease | NYSE Composite vs. Global E Online | NYSE Composite vs. Federal Home Loan |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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