Correlation Between NYSE Composite and ACAFP

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

By analyzing existing cross correlation between NYSE Composite and ACAFP 4125 10 JAN 27, you can compare the effects of market volatilities on NYSE Composite and ACAFP 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 ACAFP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ACAFP.

Diversification Opportunities for NYSE Composite and ACAFP

0.29

Correlation Coefficient

NYSE Composite  ACAFP

Modest diversification

The 3 months correlation between NYSE and ACAFP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ACAFP 4125 10 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACAFP 4125 10 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 ACAFP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACAFP 4125 10 has no effect on the direction of NYSE Composite i.e., NYSE Composite and ACAFP go up and down completely randomly.

Pair Corralation between NYSE Composite and ACAFP

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.78 times more return on investment than ACAFP. However, NYSE Composite is 1.78 times more volatile than ACAFP 4125 10 JAN 27. It trades about 0.12 of its potential returns per unit of risk. ACAFP 4125 10 JAN 27 is currently generating about -0.23 per unit of risk. If you would invest  1,912,150  in NYSE Composite on September 13, 2024 and sell it today you would earn a total of  76,953  from holding NYSE Composite or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.73%
Values	Daily Returns

NYSE Composite  vs.  ACAFP 4125 10 JAN 27

Pair Trading with NYSE Composite and ACAFP

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

The idea behind NYSE Composite and ACAFP 4125 10 JAN 27 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.