Correlation Between NYSE Composite and TNEMAK

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

By analyzing existing cross correlation between NYSE Composite and TNEMAK 3625 28 JUN 31, you can compare the effects of market volatilities on NYSE Composite and TNEMAK 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 TNEMAK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and TNEMAK.

Diversification Opportunities for NYSE Composite and TNEMAK

0.23

Correlation Coefficient

NYSE Composite  TNEMAK

Modest diversification

The 3 months correlation between NYSE and TNEMAK is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and TNEMAK 3625 28 JUN 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TNEMAK 3625 28 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 TNEMAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TNEMAK 3625 28 has no effect on the direction of NYSE Composite i.e., NYSE Composite and TNEMAK go up and down completely randomly.

Pair Corralation between NYSE Composite and TNEMAK

Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.28 times less return on investment than TNEMAK. But when comparing it to its historical volatility, NYSE Composite is 2.28 times less risky than TNEMAK. It trades about 0.24 of its potential returns per unit of risk. TNEMAK 3625 28 JUN 31 is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  7,810  in TNEMAK 3625 28 JUN 31 on October 25, 2024 and sell it today you would earn a total of  265.00  from holding TNEMAK 3625 28 JUN 31 or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.58%
Values	Daily Returns

NYSE Composite  vs.  TNEMAK 3625 28 JUN 31

Pair Trading with NYSE Composite and TNEMAK

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

The idea behind NYSE Composite and TNEMAK 3625 28 JUN 31 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.