Correlation Between New Residential and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both New Residential and Eneraqua Technologies 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 Eneraqua Technologies 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 Eneraqua Technologies PLC, you can compare the effects of market volatilities on New Residential and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Eneraqua Technologies.
Diversification Opportunities for New Residential and Eneraqua Technologies
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Eneraqua is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies PLC 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of New Residential i.e., New Residential and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between New Residential and Eneraqua Technologies
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.51 times more return on investment than Eneraqua Technologies. However, New Residential Investment is 1.95 times less risky than Eneraqua Technologies. It trades about 0.19 of its potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about -0.14 per unit of risk. If you would invest 1,114 in New Residential Investment on November 7, 2024 and sell it today you would earn a total of 50.00 from holding New Residential Investment or generate 4.49% 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. Eneraqua Technologies PLC
Performance |
| Timeline |
| New Residential Inve |
| Eneraqua Technologies PLC |
New Residential and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Eneraqua Technologies
The main advantage of trading using opposite New Residential and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| New Residential vs. Compagnie Plastic Omnium | New Residential vs. Dalata Hotel Group | New Residential vs. PPHE Hotel Group | New Residential vs. International Biotechnology Trust |
| Eneraqua Technologies vs. Berkshire Hathaway | Eneraqua Technologies vs. Samsung Electronics Co | Eneraqua Technologies vs. Samsung Electronics Co | Eneraqua Technologies vs. Chocoladefabriken Lindt Spruengli |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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