Correlation Between New Residential and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both New Residential and Metals Exploration 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 Metals Exploration 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 Metals Exploration Plc, you can compare the effects of market volatilities on New Residential and Metals Exploration 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 Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Metals Exploration.
Diversification Opportunities for New Residential and Metals Exploration
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Metals is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration 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 Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of New Residential i.e., New Residential and Metals Exploration go up and down completely randomly.
Pair Corralation between New Residential and Metals Exploration
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.28 times more return on investment than Metals Exploration. However, New Residential Investment is 3.52 times less risky than Metals Exploration. It trades about 0.2 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about -0.12 per unit of risk. If you would invest 1,109 in New Residential Investment on November 4, 2024 and sell it today you would earn a total of 55.00 from holding New Residential Investment or generate 4.96% 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. Metals Exploration Plc
Performance |
| Timeline |
| New Residential Inve |
| Metals Exploration Plc |
New Residential and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Metals Exploration
The main advantage of trading using opposite New Residential and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| New Residential vs. Atalaya Mining | New Residential vs. Zoom Video Communications | New Residential vs. GreenX Metals | New Residential vs. Batm Advanced Communications |
| Metals Exploration vs. Fortune Brands Home | Metals Exploration vs. Applied Materials | Metals Exploration vs. Gaming Realms plc | Metals Exploration vs. Synthomer plc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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