Correlation Between New Residential and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both New Residential and Ameren Corp 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 Ameren Corp 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 Ameren Corp, you can compare the effects of market volatilities on New Residential and Ameren Corp 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 Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Ameren Corp.
Diversification Opportunities for New Residential and Ameren Corp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Ameren is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp 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 Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of New Residential i.e., New Residential and Ameren Corp go up and down completely randomly.
Pair Corralation between New Residential and Ameren Corp
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.95 times more return on investment than Ameren Corp. However, New Residential Investment is 1.05 times less risky than Ameren Corp. It trades about 0.2 of its potential returns per unit of risk. Ameren Corp is currently generating about -0.04 per unit of risk. If you would invest 1,081 in New Residential Investment on September 12, 2024 and sell it today you would earn a total of 39.00 from holding New Residential Investment or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Ameren Corp
Performance |
| Timeline |
| New Residential Inve |
| Ameren Corp |
New Residential and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Ameren Corp
The main advantage of trading using opposite New Residential and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| New Residential vs. Morgan Advanced Materials | New Residential vs. Gear4music Plc | New Residential vs. JD Sports Fashion | New Residential vs. Science in Sport |
| Ameren Corp vs. Kinnevik Investment AB | Ameren Corp vs. The Mercantile Investment | Ameren Corp vs. Diversified Energy | Ameren Corp vs. New Residential Investment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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