Correlation Between New Residential and American Electric
Can any of the company-specific risk be diversified away by investing in both New Residential and American Electric 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 American Electric 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 American Electric Power, you can compare the effects of market volatilities on New Residential and American Electric 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 American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and American Electric.
Diversification Opportunities for New Residential and American Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power 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 American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of New Residential i.e., New Residential and American Electric go up and down completely randomly.
Pair Corralation between New Residential and American Electric
If you would invest 1,068 in New Residential Investment on September 5, 2024 and sell it today you would earn a total of 47.00 from holding New Residential Investment or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
New Residential Investment vs. American Electric Power
Performance |
| Timeline |
| New Residential Inve |
| American Electric Power |
New Residential and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and American Electric
The main advantage of trading using opposite New Residential and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric'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 |
| American Electric vs. Universal Music Group | American Electric vs. Waste Management | American Electric vs. Gear4music Plc | American Electric vs. Litigation Capital Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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