Correlation Between NYSE Composite and Snow Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Snow Capital 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 Snow Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Snow Capital Opportunity, you can compare the effects of market volatilities on NYSE Composite and Snow Capital 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 Snow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Snow Capital.
Diversification Opportunities for NYSE Composite and Snow Capital
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Snow is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Snow Capital Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Opportunity 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 Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Opportunity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Snow Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Snow Capital
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.58 times more return on investment than Snow Capital. However, NYSE Composite is 1.73 times less risky than Snow Capital. It trades about -0.36 of its potential returns per unit of risk. Snow Capital Opportunity is currently generating about -0.49 per unit of risk. If you would invest 2,012,345 in NYSE Composite on September 23, 2024 and sell it today you would lose (100,401) from holding NYSE Composite or give up 4.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Snow Capital Opportunity
Performance |
Timeline |
NYSE Composite and Snow Capital Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Snow Capital Opportunity
Pair trading matchups for Snow Capital
Pair Trading with NYSE Composite and Snow Capital
The main advantage of trading using opposite NYSE Composite and Snow Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Snow Capital 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 Snow Capital will offset losses from the drop in Snow Capital's long position.NYSE Composite vs. BorgWarner | NYSE Composite vs. CarsalesCom Ltd ADR | NYSE Composite vs. Flexible Solutions International | NYSE Composite vs. Lucid Group |
Snow Capital vs. Gabelli Global Financial | Snow Capital vs. Davis Financial Fund | Snow Capital vs. Vanguard Financials Index | Snow Capital vs. Blackrock Financial Institutions |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Content Syndication Quickly integrate customizable finance content to your own investment portal |