Correlation Between NYSE Composite and Satellogic Warrant

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

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

Diversification Opportunities for NYSE Composite and Satellogic Warrant

-0.22

Correlation Coefficient

NYSE Composite  Satellogic Warrant

Very good diversification

The 3 months correlation between NYSE and Satellogic is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Satellogic Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satellogic Warrant 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 Satellogic Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satellogic Warrant has no effect on the direction of NYSE Composite i.e., NYSE Composite and Satellogic Warrant go up and down completely randomly.

Pair Corralation between NYSE Composite and Satellogic Warrant

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Satellogic Warrant. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 48.41 times less risky than Satellogic Warrant. The index trades about -0.02 of its potential returns per unit of risk. The Satellogic Warrant is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4.10  in Satellogic Warrant on October 7, 2024 and sell it today you would earn a total of  39.90  from holding Satellogic Warrant or generate 973.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

NYSE Composite  vs.  Satellogic Warrant

Pair Trading with NYSE Composite and Satellogic Warrant

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

The idea behind NYSE Composite and Satellogic Warrant 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.