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 5625 percent 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

-0.02

Correlation Coefficient

Constellium  NYSE Composite

Good diversification

The 3 months correlation between Constellium and NYSE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Constellium 5625 percent 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 5625 percent 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

Assuming the 90 days trading horizon Constellium 5625 percent is expected to under-perform the NYSE Composite. In addition to that, Constellium is 3.74 times more volatile than NYSE Composite. It trades about -0.27 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.02 per unit of volatility. If you would invest  1,796,384  in NYSE Composite on March 6, 2024 and sell it today you would earn a total of  4,312  from holding NYSE Composite or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

Constellium 5625 percent  vs.  NYSE Composite