Correlation Between New Residential and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both New Residential and UNIQA Insurance 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 New Residential and UNIQA Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and UNIQA Insurance Group, you can compare the effects of market volatilities on New Residential and UNIQA Insurance 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 New Residential with a short position of UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and UNIQA Insurance.
Diversification Opportunities for New Residential and UNIQA Insurance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and UNIQA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and New Residential 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 New Residential Investment are associated (or correlated) with UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of New Residential i.e., New Residential and UNIQA Insurance go up and down completely randomly.
Pair Corralation between New Residential and UNIQA Insurance
Assuming the 90 days trading horizon New Residential Investment is expected to generate 2.8 times more return on investment than UNIQA Insurance. However, New Residential is 2.8 times more volatile than UNIQA Insurance Group. It trades about 0.05 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.05 per unit of risk. If you would invest 719.00 in New Residential Investment on August 26, 2024 and sell it today you would earn a total of 371.00 from holding New Residential Investment or generate 51.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.19% |
| Values | Daily Returns |
New Residential Investment vs. UNIQA Insurance Group
Performance |
| Timeline |
| New Residential Inve |
| UNIQA Insurance Group |
New Residential and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and UNIQA Insurance
The main advantage of trading using opposite New Residential and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| New Residential vs. Samsung Electronics Co | New Residential vs. Samsung Electronics Co | New Residential vs. Hyundai Motor | New Residential vs. Toyota Motor Corp |
| UNIQA Insurance vs. Samsung Electronics Co | UNIQA Insurance vs. Samsung Electronics Co | UNIQA Insurance vs. Hyundai Motor | UNIQA Insurance vs. Toyota Motor Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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