Correlation Between NYSE Composite and Pushfor Investments

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

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

Diversification Opportunities for NYSE Composite and Pushfor Investments

-0.64

Correlation Coefficient

NYSE Composite  Pushfor Investments

Excellent diversification

The 3 months correlation between NYSE and Pushfor is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Pushfor Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pushfor Investments 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 Pushfor Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pushfor Investments has no effect on the direction of NYSE Composite i.e., NYSE Composite and Pushfor Investments go up and down completely randomly.

Pair Corralation between NYSE Composite and Pushfor Investments

Assuming the 90 days trading horizon NYSE Composite is expected to generate 21.35 times less return on investment than Pushfor Investments. But when comparing it to its historical volatility, NYSE Composite is 35.89 times less risky than Pushfor Investments. It trades about 0.08 of its potential returns per unit of risk. Pushfor Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Pushfor Investments on September 14, 2024 and sell it today you would lose (5.00) from holding Pushfor Investments or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

NYSE Composite  vs.  Pushfor Investments

Pair Trading with NYSE Composite and Pushfor Investments

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

The idea behind NYSE Composite and Pushfor Investments 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.