Correlation Between New Residential and Impax Asset
Can any of the company-specific risk be diversified away by investing in both New Residential and Impax Asset 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 Impax Asset 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 Impax Asset Management, you can compare the effects of market volatilities on New Residential and Impax Asset 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 Impax Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Impax Asset.
Diversification Opportunities for New Residential and Impax Asset
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Impax is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management 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 Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of New Residential i.e., New Residential and Impax Asset go up and down completely randomly.
Pair Corralation between New Residential and Impax Asset
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.52 times more return on investment than Impax Asset. However, New Residential Investment is 1.91 times less risky than Impax Asset. It trades about -0.05 of its potential returns per unit of risk. Impax Asset Management is currently generating about -0.07 per unit of risk. If you would invest 1,160 in New Residential Investment on August 29, 2024 and sell it today you would lose (51.00) from holding New Residential Investment or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Impax Asset Management
Performance |
| Timeline |
| New Residential Inve |
| Impax Asset Management |
New Residential and Impax Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Impax Asset
The main advantage of trading using opposite New Residential and Impax Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Impax Asset 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 Impax Asset will offset losses from the drop in Impax Asset's long position.| New Residential vs. Lendinvest PLC | New Residential vs. Neometals | New Residential vs. Coor Service Management | New Residential vs. Albion Technology General |
| Impax Asset vs. Toyota Motor Corp | Impax Asset vs. Lendinvest PLC | Impax Asset vs. Neometals | Impax Asset vs. Coor Service Management |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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