Correlation Between NYSE Composite and Sgi Peak

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

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

Diversification Opportunities for NYSE Composite and Sgi Peak

0.96

Correlation Coefficient

NYSE Composite  Sgi Peak

Almost no diversification

The 3 months correlation between NYSE and Sgi is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Sgi Peak Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sgi Peak Growth 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 Sgi Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sgi Peak Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Sgi Peak go up and down completely randomly.

Pair Corralation between NYSE Composite and Sgi Peak

Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.87 times more return on investment than Sgi Peak. However, NYSE Composite is 1.14 times less risky than Sgi Peak. It trades about 0.04 of its potential returns per unit of risk. Sgi Peak Growth is currently generating about 0.03 per unit of risk. If you would invest  1,956,073  in NYSE Composite on October 24, 2024 and sell it today you would earn a total of  33,286  from holding NYSE Composite or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

NYSE Composite  vs.  Sgi Peak Growth

Pair Trading with NYSE Composite and Sgi Peak

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

The idea behind NYSE Composite and Sgi Peak Growth 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.