Correlation Between New Residential and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both New Residential and International Biotechnology 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 International Biotechnology 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 International Biotechnology Trust, you can compare the effects of market volatilities on New Residential and International Biotechnology 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 International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and International Biotechnology.
Diversification Opportunities for New Residential and International Biotechnology
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology 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 International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of New Residential i.e., New Residential and International Biotechnology go up and down completely randomly.
Pair Corralation between New Residential and International Biotechnology
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.13 times more return on investment than International Biotechnology. However, New Residential is 1.13 times more volatile than International Biotechnology Trust. It trades about 0.14 of its potential returns per unit of risk. International Biotechnology Trust is currently generating about -0.03 per unit of risk. If you would invest 1,090 in New Residential Investment on December 3, 2024 and sell it today you would earn a total of 114.00 from holding New Residential Investment or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
New Residential Investment vs. International Biotechnology Tr
Performance |
| Timeline |
| New Residential Inve |
| International Biotechnology |
New Residential and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and International Biotechnology
The main advantage of trading using opposite New Residential and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| New Residential vs. Take Two Interactive Software | New Residential vs. MTI Wireless Edge | New Residential vs. Sunny Optical Technology | New Residential vs. Ashtead Technology Holdings |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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