Correlation Between NYSE Composite and SFCCN

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

By analyzing existing cross correlation between NYSE Composite and SFCCN 53 13 MAY 28, you can compare the effects of market volatilities on NYSE Composite and SFCCN 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 SFCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SFCCN.

Diversification Opportunities for NYSE Composite and SFCCN

0.72

Correlation Coefficient

NYSE Composite  SFCCN

Poor diversification

The 3 months correlation between NYSE and SFCCN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SFCCN 53 13 MAY 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFCCN 53 13 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 SFCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFCCN 53 13 has no effect on the direction of NYSE Composite i.e., NYSE Composite and SFCCN go up and down completely randomly.

Pair Corralation between NYSE Composite and SFCCN

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.36 times more return on investment than SFCCN. However, NYSE Composite is 1.36 times more volatile than SFCCN 53 13 MAY 28. It trades about 0.07 of its potential returns per unit of risk. SFCCN 53 13 MAY 28 is currently generating about -0.01 per unit of risk. If you would invest  1,925,638  in NYSE Composite on September 16, 2024 and sell it today you would earn a total of  47,299  from holding NYSE Composite or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.38%
Values	Daily Returns

NYSE Composite  vs.  SFCCN 53 13 MAY 28

Pair Trading with NYSE Composite and SFCCN

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

The idea behind NYSE Composite and SFCCN 53 13 MAY 28 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.