Correlation Between NYSE Composite and Federal Signal
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Federal Signal 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 Federal Signal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Federal Signal, you can compare the effects of market volatilities on NYSE Composite and Federal Signal 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 Federal Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Federal Signal.
Diversification Opportunities for NYSE Composite and Federal Signal
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Federal is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Federal Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Signal 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 Federal Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Signal has no effect on the direction of NYSE Composite i.e., NYSE Composite and Federal Signal go up and down completely randomly.
Pair Corralation between NYSE Composite and Federal Signal
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.36 times more return on investment than Federal Signal. However, NYSE Composite is 2.8 times less risky than Federal Signal. It trades about 0.05 of its potential returns per unit of risk. Federal Signal is currently generating about -0.04 per unit of risk. If you would invest 2,176,500 in NYSE Composite on October 6, 2025 and sell it today you would earn a total of 46,889 from holding NYSE Composite or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Federal Signal
Performance |
| Timeline |
NYSE Composite and Federal Signal Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Federal Signal
Pair trading matchups for Federal Signal
Pair Trading with NYSE Composite and Federal Signal
The main advantage of trading using opposite NYSE Composite and Federal Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Federal Signal 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 Federal Signal will offset losses from the drop in Federal Signal's long position.| NYSE Composite vs. Xtant Medical Holdings | NYSE Composite vs. Scottish Mortgage Investment | NYSE Composite vs. Virtus Investment Partners | NYSE Composite vs. Medical Connections Holdings |
| Federal Signal vs. Zurn Elkay Water | Federal Signal vs. ESAB Corp | Federal Signal vs. Moog Inc | Federal Signal vs. Toro Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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