Correlation Between New Residential and Lords Grp
Can any of the company-specific risk be diversified away by investing in both New Residential and Lords Grp 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 Lords Grp 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 Lords Grp Trading, you can compare the effects of market volatilities on New Residential and Lords Grp 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 Lords Grp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Lords Grp.
Diversification Opportunities for New Residential and Lords Grp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Lords is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Lords Grp Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lords Grp Trading 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 Lords Grp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lords Grp Trading has no effect on the direction of New Residential i.e., New Residential and Lords Grp go up and down completely randomly.
Pair Corralation between New Residential and Lords Grp
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.6 times more return on investment than Lords Grp. However, New Residential Investment is 1.66 times less risky than Lords Grp. It trades about 0.04 of its potential returns per unit of risk. Lords Grp Trading is currently generating about -0.08 per unit of risk. If you would invest 1,051 in New Residential Investment on August 28, 2024 and sell it today you would earn a total of 64.00 from holding New Residential Investment or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.45% |
| Values | Daily Returns |
New Residential Investment vs. Lords Grp Trading
Performance |
| Timeline |
| New Residential Inve |
| Lords Grp Trading |
New Residential and Lords Grp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Lords Grp
The main advantage of trading using opposite New Residential and Lords Grp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Lords Grp 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 Lords Grp will offset losses from the drop in Lords Grp'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 |
| Lords Grp vs. Samsung Electronics Co | Lords Grp vs. Samsung Electronics Co | Lords Grp vs. Hyundai Motor | Lords Grp vs. Toyota Motor Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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