Correlation Between New Residential and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both New Residential and Cornish Metals 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 Cornish Metals 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 Cornish Metals, you can compare the effects of market volatilities on New Residential and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Cornish Metals.
Diversification Opportunities for New Residential and Cornish Metals
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Cornish is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of New Residential i.e., New Residential and Cornish Metals go up and down completely randomly.
Pair Corralation between New Residential and Cornish Metals
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.27 times more return on investment than Cornish Metals. However, New Residential Investment is 3.66 times less risky than Cornish Metals. It trades about 0.07 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.01 per unit of risk. If you would invest 967.00 in New Residential Investment on November 9, 2024 and sell it today you would earn a total of 222.00 from holding New Residential Investment or generate 22.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.79% |
| Values | Daily Returns |
New Residential Investment vs. Cornish Metals
Performance |
| Timeline |
| New Residential Inve |
| Cornish Metals |
New Residential and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Cornish Metals
The main advantage of trading using opposite New Residential and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| New Residential vs. SMA Solar Technology | New Residential vs. Spirent Communications plc | New Residential vs. Zoom Video Communications | New Residential vs. Alfa Financial Software |
| Cornish Metals vs. Check Point Software | Cornish Metals vs. Heavitree Brewery | Cornish Metals vs. Spotify Technology SA | Cornish Metals vs. Sabien Technology Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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