Correlation Between New Residential and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both New Residential and PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel Group, you can compare the effects of market volatilities on New Residential and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and PPHE Hotel.
Diversification Opportunities for New Residential and PPHE Hotel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and PPHE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of New Residential i.e., New Residential and PPHE Hotel go up and down completely randomly.
Pair Corralation between New Residential and PPHE Hotel
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.39 times more return on investment than PPHE Hotel. However, New Residential is 1.39 times more volatile than PPHE Hotel Group. It trades about 0.04 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.02 per unit of risk. If you would invest 753.00 in New Residential Investment on October 13, 2024 and sell it today you would earn a total of 324.00 from holding New Residential Investment or generate 43.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
New Residential Investment vs. PPHE Hotel Group
Performance |
| Timeline |
| New Residential Inve |
| PPHE Hotel Group |
New Residential and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and PPHE Hotel
The main advantage of trading using opposite New Residential and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| New Residential vs. Dentsply Sirona | New Residential vs. Iron Mountain | New Residential vs. Bankers Investment Trust | New Residential vs. Mineral Financial Investments |
| PPHE Hotel vs. FC Investment Trust | PPHE Hotel vs. Mobius Investment Trust | PPHE Hotel vs. New Residential Investment | PPHE Hotel vs. EJF Investments |
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 Stocks Directory module to find actively traded stocks across global markets.
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