Correlation Between NYSE Composite and Aston Martin
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Aston Martin 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 Aston Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Aston Martin Lagonda, you can compare the effects of market volatilities on NYSE Composite and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aston Martin.
Diversification Opportunities for NYSE Composite and Aston Martin
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Aston is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aston Martin go up and down completely randomly.
Pair Corralation between NYSE Composite and Aston Martin
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.26 times more return on investment than Aston Martin. However, NYSE Composite is 3.84 times less risky than Aston Martin. It trades about -0.03 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.05 per unit of risk. If you would invest 1,812,226 in NYSE Composite on March 6, 2024 and sell it today you would lose (18,777) from holding NYSE Composite or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Aston Martin Lagonda
Performance |
| Timeline |
NYSE Composite and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |