Correlation Between NYSE Composite and Creative Global

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

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

Diversification Opportunities for NYSE Composite and Creative Global

-0.67

Correlation Coefficient

NYSE Composite  Creative Global

Excellent diversification

The 3 months correlation between NYSE and Creative is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Creative Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Global Tech 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 Creative Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Global Tech has no effect on the direction of NYSE Composite i.e., NYSE Composite and Creative Global go up and down completely randomly.

Pair Corralation between NYSE Composite and Creative Global

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Creative Global. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 354.97 times less risky than Creative Global. The index trades about -0.04 of its potential returns per unit of risk. The Creative Global Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Creative Global Technology on September 22, 2024 and sell it today you would earn a total of  783.00  from holding Creative Global Technology or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	29.69%
Values	Daily Returns

NYSE Composite  vs.  Creative Global Technology

Pair Trading with NYSE Composite and Creative Global

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

The idea behind NYSE Composite and Creative Global Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.