Correlation Between Wavestone and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Wavestone 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 Wavestone and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wavestone SA and NYSE Composite, you can compare the effects of market volatilities on Wavestone 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 Wavestone with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wavestone and NYSE Composite.
Diversification Opportunities for Wavestone and NYSE Composite
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wavestone and NYSE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wavestone SA and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Wavestone 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 Wavestone SA 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 Wavestone i.e., Wavestone and NYSE Composite go up and down completely randomly.
Pair Corralation between Wavestone and NYSE Composite
Assuming the 90 days trading horizon Wavestone SA is expected to generate 2.61 times more return on investment than NYSE Composite. However, Wavestone is 2.61 times more volatile than NYSE Composite. It trades about 0.05 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.08 per unit of risk. If you would invest 4,508 in Wavestone SA on January 31, 2024 and sell it today you would earn a total of 1,012 from holding Wavestone SA or generate 22.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.89% |
Values | Daily Returns |
Wavestone SA vs. NYSE Composite
Performance |
Timeline |
Wavestone and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Wavestone SA
Pair trading matchups for Wavestone
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Wavestone and NYSE Composite
The main advantage of trading using opposite Wavestone and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wavestone 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.Wavestone vs. Aubay Socit Anonyme | Wavestone vs. Neurones | Wavestone vs. Alten SA | Wavestone vs. Infotel SA |
NYSE Composite vs. Dennys Corp | NYSE Composite vs. Asbury Automotive Group | NYSE Composite vs. Arrow Electronics | NYSE Composite vs. Biglari Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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