Correlation Between NYSE Composite and Peak Resources

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

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

Diversification Opportunities for NYSE Composite and Peak Resources

0.0

Correlation Coefficient

NYSE Composite  Peak Resources

Pay attention - limited upside

The 3 months correlation between NYSE and Peak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources 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 Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of NYSE Composite i.e., NYSE Composite and Peak Resources go up and down completely randomly.

Pair Corralation between NYSE Composite and Peak Resources

If you would invest  1,924,339  in NYSE Composite on September 5, 2024 and sell it today you would earn a total of  94,242  from holding NYSE Composite or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

NYSE Composite  vs.  Peak Resources Limited

Pair Trading with NYSE Composite and Peak Resources

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

The idea behind NYSE Composite and Peak Resources Limited 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.