Correlation Between New Residential and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both New Residential and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on New Residential and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Compagnie Plastic.
Diversification Opportunities for New Residential and Compagnie Plastic
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Compagnie is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of New Residential i.e., New Residential and Compagnie Plastic go up and down completely randomly.
Pair Corralation between New Residential and Compagnie Plastic
Assuming the 90 days trading horizon New Residential Investment is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, New Residential Investment is 2.04 times less risky than Compagnie Plastic. The stock trades about -0.08 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Compagnie Plastic Omnium on September 24, 2024 and sell it today you would earn a total of 133.00 from holding Compagnie Plastic Omnium or generate 15.89% 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. Compagnie Plastic Omnium
Performance |
| Timeline |
| New Residential Inve |
| Compagnie Plastic Omnium |
New Residential and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Compagnie Plastic
The main advantage of trading using opposite New Residential and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| New Residential vs. Uniper SE | New Residential vs. Mulberry Group PLC | New Residential vs. London Security Plc | New Residential vs. Triad Group PLC |
| Compagnie Plastic vs. Hollywood Bowl Group | Compagnie Plastic vs. AcadeMedia AB | Compagnie Plastic vs. Porvair plc | Compagnie Plastic vs. LBG Media PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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