Correlation Between NYSE Composite and VanEck Israel
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and VanEck Israel 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 VanEck Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and VanEck Israel ETF, you can compare the effects of market volatilities on NYSE Composite and VanEck Israel 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 VanEck Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and VanEck Israel.
Diversification Opportunities for NYSE Composite and VanEck Israel
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and VanEck is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and VanEck Israel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Israel ETF 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 VanEck Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Israel ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and VanEck Israel go up and down completely randomly.
Pair Corralation between NYSE Composite and VanEck Israel
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.54 times more return on investment than VanEck Israel. However, NYSE Composite is 1.87 times less risky than VanEck Israel. It trades about -0.22 of its potential returns per unit of risk. VanEck Israel ETF is currently generating about -0.2 per unit of risk. If you would invest 1,821,619 in NYSE Composite on February 1, 2024 and sell it today you would lose (61,285) from holding NYSE Composite or give up 3.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. VanEck Israel ETF
Performance |
Timeline |
NYSE Composite and VanEck Israel Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
VanEck Israel ETF
Pair trading matchups for VanEck Israel
Pair Trading with NYSE Composite and VanEck Israel
The main advantage of trading using opposite NYSE Composite and VanEck Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, VanEck Israel 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 VanEck Israel will offset losses from the drop in VanEck Israel's long position.NYSE Composite vs. CECO Environmental Corp | NYSE Composite vs. Air Lease | NYSE Composite vs. Artisan Partners Asset | NYSE Composite vs. Iris Acquisition Corp |
VanEck Israel vs. BlueStar Israel Technology | VanEck Israel vs. iShares MSCI Israel | VanEck Israel vs. FlexShares International Quality | VanEck Israel vs. VanEck Morningstar International |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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