Correlation Between NYSE Composite and C2C Gold

Can any of the company-specific risk be diversified away by investing in both NYSE Composite and C2C Gold 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 C2C Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NYSE Composite and C2C Gold Corp, you can compare the effects of market volatilities on NYSE Composite and C2C Gold 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 C2C Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and C2C Gold.

Diversification Opportunities for NYSE Composite and C2C Gold

0.28

Correlation Coefficient

NYSE Composite  C2C Gold

Modest diversification

The 3 months correlation between NYSE and C2C is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and C2C Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C2C Gold Corp 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 C2C Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C2C Gold Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and C2C Gold go up and down completely randomly.

Pair Corralation between NYSE Composite and C2C Gold

Assuming the 90 days trading horizon NYSE Composite is expected to generate 13.62 times less return on investment than C2C Gold. But when comparing it to its historical volatility, NYSE Composite is 19.12 times less risky than C2C Gold. It trades about 0.12 of its potential returns per unit of risk. C2C Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.00  in C2C Gold Corp on August 30, 2024 and sell it today you would earn a total of  1.58  from holding C2C Gold Corp or generate 26.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NYSE Composite  vs.  C2C Gold Corp

Pair Trading with NYSE Composite and C2C Gold

The main advantage of trading using opposite NYSE Composite and C2C Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, C2C Gold 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 C2C Gold will offset losses from the drop in C2C Gold's long position.

The idea behind NYSE Composite and C2C Gold Corp 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.