Correlation Between New Residential and WW Grainger
Can any of the company-specific risk be diversified away by investing in both New Residential and WW Grainger 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 WW Grainger 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 WW Grainger, you can compare the effects of market volatilities on New Residential and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and WW Grainger.
Diversification Opportunities for New Residential and WW Grainger
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and 0IZI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of New Residential i.e., New Residential and WW Grainger go up and down completely randomly.
Pair Corralation between New Residential and WW Grainger
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.52 times more return on investment than WW Grainger. However, New Residential is 1.52 times more volatile than WW Grainger. It trades about 0.24 of its potential returns per unit of risk. WW Grainger is currently generating about 0.2 per unit of risk. 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 | Flat |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
New Residential Investment vs. WW Grainger
Performance |
| Timeline |
| New Residential Inve |
| WW Grainger |
New Residential and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and WW Grainger
The main advantage of trading using opposite New Residential and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| New Residential vs. Ross Stores | New Residential vs. Veolia Environnement VE | New Residential vs. Orient Telecoms | New Residential vs. Verizon Communications |
| WW Grainger vs. Molson Coors Beverage | WW Grainger vs. Micron Technology | WW Grainger vs. Tyson Foods Cl | WW Grainger vs. DXC Technology Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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