Correlation Between Constellium and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Constellium and NYSE Composite 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 Constellium and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and NYSE Composite, you can compare the effects of market volatilities on Constellium and NYSE Composite 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 Constellium with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and NYSE Composite.
Diversification Opportunities for Constellium and NYSE Composite
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Constellium and NYSE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Constellium 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 Constellium Nv are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Constellium i.e., Constellium and NYSE Composite go up and down completely randomly.
Pair Corralation between Constellium and NYSE Composite
Given the investment horizon of 90 days Constellium Nv is expected to generate 2.83 times more return on investment than NYSE Composite. However, Constellium is 2.83 times more volatile than NYSE Composite. It trades about 0.03 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.04 per unit of risk. If you would invest 1,573 in Constellium Nv on February 3, 2024 and sell it today you would earn a total of 425.00 from holding Constellium Nv or generate 27.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Constellium Nv vs. NYSE Composite
Performance |
Timeline |
Constellium and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Constellium Nv
Pair trading matchups for Constellium
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Constellium and NYSE Composite
The main advantage of trading using opposite Constellium and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Constellium vs. China Hongqiao Group | Constellium vs. Alumina Limited PK | Constellium vs. Norsk Hydro ASA |
NYSE Composite vs. Amkor Technology | NYSE Composite vs. MACOM Technology Solutions | NYSE Composite vs. Weibo Corp | NYSE Composite vs. NETGEAR |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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