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Show HN: Find the 10 highest and 10 lowest correlations to any stock

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Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#71

Post by nickles »

andrewmcwatters wrote: post #66
nickles wrote: post #56

Earlier quoted context omitted.

> If you took one company and compared it against the total US market, then you have something at least. This is a common metric referred to as market beta . > If you take the market itself and compare it against itself, it makes no sense. S&P 500 and Russell 2000 are both broad market indices, but they perform differently. Even using the same index constituents with different weightings (e.g. equal vs cap weighted)…

I don't think you understand why multiple broad market indices exist in the first place. It has nothing to do with "performance" and everything to do with licensing fees when institutional organizations want to track against the market. No one. No one is seriously looking at the Russell 3000 and comparing it to the Wilshire 5000. To the child comment: I'm talking about two total market indices, apples to apples, and…

> No one. No one is seriously looking at the Russell 3000 and comparing it to the Wilshire 5000.

People compare indices all the time to assess relative performance (e.g. Russell to NASDAQ) or HY credit to IG.

Response to edits:

> I'm talking about two total market indices, apples to apples, and you're talking about apples to oranges. NASDAQ is a stock exchange, not an index.

NASDAQ composite is one of the most commonly referenced indices. There's also NASDAQ 100, on which one of the largest ETFs in the world (QQQ) is based.

> Further still, even if you were talking about the NASDAQ composite, they're two entirely different indices. They do not have the same goals.

That's why people compare indices -- they're interested in evaluating different aspects of the market.

> There isn't much meaning between comparing two or more indices that have the same goals and constituents. You're only tracking the differences between constituents at that point, and you wouldn't need beta to do that. You could just calculate the difference between the constituents that are not a part of the total set.

Weightings? An equal weighted index will reflect increased contribution from smaller companies versus a market cap weighting (compare ETFs SPY/RSP). Same constituents, different emphasis.

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#72

Post by mfrye0 »

Seems like an interesting project, but so far the UX isn't great.

The searching UI for companies has no loading or success/failure indicators. A note on performance - waiting an extra second before firing the search request can help take some of the load off the server, along with cancelling requests after I change the search.

Some requests time out, and others return no results (e.g. HOOD, TLRY).

For other requests that returned results, there's no correlation (Apple).

Maybe an example page could be helpful to illustrate what the app can do?

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#74

Post by deltree7 »

HFguy wrote: post #46

Couple of random thoughts: - Building things like this is always great. And its a fun site to poke around on. - I would not count on this approach or expect it to be reliable in terms of actually hedging. Correlation, as a measure, has lots of issues. You are boiling down a lot of complex relationships into a single number. While it is convenient for many calculations, there are many problems. For example, many asset…

tl;dr -- All trading strategies work, until they don't.

And most people blow up their account, because their trading strategies worked for a long time.

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#75

Post by OJFord »

iso1631 wrote: post #19

I can see the risk in short positions - you theoretically could lose an infinite amount (if you borrow X shares of something, sell them, but then can't find any to buy when it comes to returning them), and it's certainly possible to lose more than you put in (sell 100 short at $10 netting you $1000, price doubles overnight on new news, you have to buy $2000, losing a total of $1000 in the process. If price trippled o…

When you buy options you're buying exactly that, the option to make a potentially lucrative trade in the future at a price agreed now. (Bought) Puts have just as limited downside as (bought) calls.

The bigger risk comes in selling options: you sell a call and (assuming you don't already have the underlying shares) your downside is unlimited - you might have to pay sky high market prices only to sell (to the call option holder) low; you sell a put and your downside could be the entire strike price - the underlying could have gone to zero but you're forced to buy high (at the agreed price).

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#77

Post by dmitrygr »

This tool does not correctly handle stock splits and thus all the correlations it produces are wrong for any stock that has ever had a split or a reverse split. It shows a split as a huge price drop, but that is not really how that works, since the number of shares expands, thus anyone holding the stock does not, in fact, face a 4x loss for a 1:4 split.

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#78

Post by surfsvammel »

Correlation between assets change over time. Predicting what the correlation will be in the future is important for asset managers.

I am supervising a master thesis project (in fact the second such project on the matter) where we are trying to predict the covariance matrix of a portfolio of assets using machine learning. Results are promising!

Re: Show HN: Find the 10 highest and 10 lowest correlations to any stock

#80

Post by jedberg »

runeks wrote: post #13

Super useful! However, I get a “504 Gateway Time-out” error for https://betagainst.fun/asset/bz__f_bno/ . HN hug of death?

Do you have an Orbi or Netgear router? The service they use to block harmful websites has list this one as harmful.
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