Correlation Between Raymond James and New Residential
Can any of the company-specific risk be diversified away by investing in both Raymond James and New Residential 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 Raymond James and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raymond James Financial and New Residential Investment, you can compare the effects of market volatilities on Raymond James and New Residential 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 Raymond James with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raymond James and New Residential.
Diversification Opportunities for Raymond James and New Residential
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raymond and New is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Raymond James 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 Raymond James Financial are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Raymond James i.e., Raymond James and New Residential go up and down completely randomly.
Pair Corralation between Raymond James and New Residential
Assuming the 90 days trading horizon Raymond James Financial is expected to generate 1.26 times more return on investment than New Residential. However, Raymond James is 1.26 times more volatile than New Residential Investment. It trades about 0.44 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.17 per unit of risk. If you would invest 15,426 in Raymond James Financial on October 29, 2024 and sell it today you would earn a total of 1,852 from holding Raymond James Financial or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Raymond James Financial vs. New Residential Investment
Performance |
| Timeline |
| Raymond James Financial |
| New Residential Inve |
Raymond James and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raymond James and New Residential
The main advantage of trading using opposite Raymond James and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Raymond James vs. Infrastrutture Wireless Italiane | Raymond James vs. Automatic Data Processing | Raymond James vs. Datalogic | Raymond James vs. Silver Bullet Data |
| New Residential vs. Ameriprise Financial | New Residential vs. BE Semiconductor Industries | New Residential vs. Raymond James Financial | New Residential vs. Ally Financial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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