Correlation Between NYSE Composite and Wing Yip

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

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

Diversification Opportunities for NYSE Composite and Wing Yip

-0.21

Correlation Coefficient

NYSE Composite  Wing Yip

Very good diversification

The 3 months correlation between NYSE and Wing is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of NYSE Composite i.e., NYSE Composite and Wing Yip go up and down completely randomly.

Pair Corralation between NYSE Composite and Wing Yip

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1565.19 times less return on investment than Wing Yip. But when comparing it to its historical volatility, NYSE Composite is 518.05 times less risky than Wing Yip. It trades about 0.1 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Wing Yip Food on September 13, 2024 and sell it today you would earn a total of  438.00  from holding Wing Yip Food or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	18.75%
Values	Daily Returns

NYSE Composite  vs.  Wing Yip Food

Pair Trading with NYSE Composite and Wing Yip

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

The idea behind NYSE Composite and Wing Yip Food 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.