Correlation Between NYSE Composite and Radius Global

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

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

Diversification Opportunities for NYSE Composite and Radius Global

0.0

Correlation Coefficient

NYSE Composite  Radius Global

Pay attention - limited upside

The 3 months correlation between NYSE and Radius is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Radius Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radius Global Infras 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 Radius Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radius Global Infras has no effect on the direction of NYSE Composite i.e., NYSE Composite and Radius Global go up and down completely randomly.

Pair Corralation between NYSE Composite and Radius Global

Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.84 times less return on investment than Radius Global. But when comparing it to its historical volatility, NYSE Composite is 2.51 times less risky than Radius Global. It trades about 0.06 of its potential returns per unit of risk. Radius Global Infrastructure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,241  in Radius Global Infrastructure on October 12, 2024 and sell it today you would earn a total of  248.00  from holding Radius Global Infrastructure or generate 19.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.66%
Values	Daily Returns

NYSE Composite  vs.  Radius Global Infrastructure

Pair Trading with NYSE Composite and Radius Global

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

The idea behind NYSE Composite and Radius Global Infrastructure 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.