Correlation Between New Residential and Commerzbank
Can any of the company-specific risk be diversified away by investing in both New Residential and Commerzbank 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 Commerzbank 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 Commerzbank AG, you can compare the effects of market volatilities on New Residential and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Commerzbank.
Diversification Opportunities for New Residential and Commerzbank
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Commerzbank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of New Residential i.e., New Residential and Commerzbank go up and down completely randomly.
Pair Corralation between New Residential and Commerzbank
Assuming the 90 days trading horizon New Residential is expected to generate 3.7 times less return on investment than Commerzbank. In addition to that, New Residential is 1.19 times more volatile than Commerzbank AG. It trades about 0.16 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.7 per unit of volatility. If you would invest 1,510 in Commerzbank AG on October 25, 2024 and sell it today you would earn a total of 276.00 from holding Commerzbank AG or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
New Residential Investment vs. Commerzbank AG
Performance |
| Timeline |
| New Residential Inve |
| Commerzbank AG |
New Residential and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Commerzbank
The main advantage of trading using opposite New Residential and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank'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 |
| Commerzbank vs. PPHE Hotel Group | Commerzbank vs. Invesco Physical Silver | Commerzbank vs. Edita Food Industries | Commerzbank vs. Hecla Mining 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |