Correlation Between New Residential and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both New Residential and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan, you can compare the effects of market volatilities on New Residential and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Freeport McMoRan.
Diversification Opportunities for New Residential and Freeport McMoRan
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Freeport is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of New Residential i.e., New Residential and Freeport McMoRan go up and down completely randomly.
Pair Corralation between New Residential and Freeport McMoRan
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.93 times more return on investment than Freeport McMoRan. However, New Residential Investment is 1.07 times less risky than Freeport McMoRan. It trades about 0.03 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.19 per unit of risk. If you would invest 1,084 in New Residential Investment on October 12, 2024 and sell it today you would earn a total of 8.00 from holding New Residential Investment or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Freeport McMoRan
Performance |
| Timeline |
| New Residential Inve |
| Freeport McMoRan |
New Residential and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Freeport McMoRan
The main advantage of trading using opposite New Residential and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| New Residential vs. Walmart | New Residential vs. BYD Co | New Residential vs. Volkswagen AG | New Residential vs. Volkswagen AG Non Vtg |
| Freeport McMoRan vs. New Residential Investment | Freeport McMoRan vs. alstria office REIT AG | Freeport McMoRan vs. Taylor Maritime Investments | Freeport McMoRan vs. Beazer Homes USA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |