Correlation Between New Residential and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both New Residential and Target Healthcare 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 Target Healthcare 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 Target Healthcare REIT, you can compare the effects of market volatilities on New Residential and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Target Healthcare.
Diversification Opportunities for New Residential and Target Healthcare
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Target is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of New Residential i.e., New Residential and Target Healthcare go up and down completely randomly.
Pair Corralation between New Residential and Target Healthcare
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.89 times more return on investment than Target Healthcare. However, New Residential Investment is 1.13 times less risky than Target Healthcare. It trades about 0.29 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about -0.18 per unit of risk. If you would invest 1,048 in New Residential Investment on August 27, 2024 and sell it today you would earn a total of 67.00 from holding New Residential Investment or generate 6.39% 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. Target Healthcare REIT
Performance |
| Timeline |
| New Residential Inve |
| Target Healthcare REIT |
New Residential and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Target Healthcare
The main advantage of trading using opposite New Residential and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare'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 |
| Target Healthcare vs. Global Net Lease | Target Healthcare vs. New Residential Investment | Target Healthcare vs. Schroders Investment Trusts | Target Healthcare vs. Federal Realty Investment |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |