Correlation Between AFLAC and New Residential
Can any of the company-specific risk be diversified away by investing in both AFLAC and New Residential 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 AFLAC and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFLAC Inc and New Residential Investment, you can compare the effects of market volatilities on AFLAC and New Residential 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 AFLAC with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFLAC and New Residential.
Diversification Opportunities for AFLAC and New Residential
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFLAC and New is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AFLAC Inc and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and AFLAC 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 AFLAC Inc are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of AFLAC i.e., AFLAC and New Residential go up and down completely randomly.
Pair Corralation between AFLAC and New Residential
Assuming the 90 days trading horizon AFLAC is expected to generate 1.87 times less return on investment than New Residential. But when comparing it to its historical volatility, AFLAC Inc is 1.76 times less risky than New Residential. It trades about 0.22 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,058 in New Residential Investment on October 24, 2024 and sell it today you would earn a total of 77.00 from holding New Residential Investment or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFLAC Inc vs. New Residential Investment
Performance |
| Timeline |
| AFLAC Inc |
| New Residential Inve |
AFLAC and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFLAC and New Residential
The main advantage of trading using opposite AFLAC and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFLAC position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| AFLAC vs. McEwen Mining | AFLAC vs. Thor Mining PLC | AFLAC vs. Zegona Communications Plc | AFLAC vs. Hochschild Mining plc |
| New Residential vs. Ross Stores | New Residential vs. Veolia Environnement VE | New Residential vs. Orient Telecoms | New Residential vs. Verizon Communications |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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