Correlation Between New Residential and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both New Residential and Prosiebensat 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 Prosiebensat 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 Prosiebensat 1 Media, you can compare the effects of market volatilities on New Residential and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Prosiebensat.
Diversification Opportunities for New Residential and Prosiebensat
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Prosiebensat is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of New Residential i.e., New Residential and Prosiebensat go up and down completely randomly.
Pair Corralation between New Residential and Prosiebensat
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.83 times more return on investment than Prosiebensat. However, New Residential Investment is 1.2 times less risky than Prosiebensat. It trades about 0.16 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about 0.01 per unit of risk. If you would invest 1,078 in New Residential Investment on October 25, 2024 and sell it today you would earn a total of 51.00 from holding New Residential Investment or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
New Residential Investment vs. Prosiebensat 1 Media
Performance |
| Timeline |
| New Residential Inve |
| Prosiebensat 1 Media |
New Residential and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Prosiebensat
The main advantage of trading using opposite New Residential and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.| New Residential vs. Jupiter Fund Management | New Residential vs. Naked Wines plc | New Residential vs. Fulcrum Metals PLC | New Residential vs. Take Two Interactive Software |
| Prosiebensat vs. Verizon Communications | Prosiebensat vs. MoneysupermarketCom Group PLC | Prosiebensat vs. Zoom Video Communications | Prosiebensat vs. Cairo Communication SpA |
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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