Correlation Between Freeport McMoRan and New Residential
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and New Residential Investment, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and New Residential.
Diversification Opportunities for Freeport McMoRan and New Residential
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Freeport and New is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and New Residential go up and down completely randomly.
Pair Corralation between Freeport McMoRan and New Residential
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the New Residential. In addition to that, Freeport McMoRan is 1.07 times more volatile than New Residential Investment. It trades about -0.19 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.03 per unit of volatility. If you would invest 1,084 in New Residential Investment on October 12, 2024 and sell it today you would earn a total of 8.00 from holding New Residential Investment or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. New Residential Investment
Performance |
| Timeline |
| Freeport McMoRan |
| New Residential Inve |
Freeport McMoRan and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and New Residential
The main advantage of trading using opposite Freeport McMoRan and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. New Residential Investment | Freeport McMoRan vs. alstria office REIT AG | Freeport McMoRan vs. Taylor Maritime Investments | Freeport McMoRan vs. Beazer Homes USA |
| New Residential vs. Walmart | New Residential vs. BYD Co | New Residential vs. Volkswagen AG | New Residential vs. Volkswagen AG Non Vtg |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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