Correlation Between New Residential and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both New Residential and Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC, you can compare the effects of market volatilities on New Residential and Ferrexpo PLC 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 Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Ferrexpo PLC.
Diversification Opportunities for New Residential and Ferrexpo PLC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Ferrexpo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo 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 Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of New Residential i.e., New Residential and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between New Residential and Ferrexpo PLC
Assuming the 90 days trading horizon New Residential is expected to generate 8.49 times less return on investment than Ferrexpo PLC. But when comparing it to its historical volatility, New Residential Investment is 10.17 times less risky than Ferrexpo PLC. It trades about 0.35 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,970 in Ferrexpo PLC on September 5, 2024 and sell it today you would earn a total of 3,810 from holding Ferrexpo PLC or generate 63.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Ferrexpo PLC
Performance |
| Timeline |
| New Residential Inve |
| Ferrexpo PLC |
New Residential and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Ferrexpo PLC
The main advantage of trading using opposite New Residential and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| New Residential vs. Samsung Electronics Co | New Residential vs. Samsung Electronics Co | New Residential vs. Hyundai Motor | New Residential vs. Toyota Motor Corp |
| Ferrexpo PLC vs. Herald Investment Trust | Ferrexpo PLC vs. Lords Grp Trading | Ferrexpo PLC vs. Hansa Investment | Ferrexpo PLC vs. New Residential Investment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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