Correlation Between Spotify Technology and New Residential
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and New Residential Investment, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and New Residential.
Diversification Opportunities for Spotify Technology and New Residential
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spotify and New is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and New Residential go up and down completely randomly.
Pair Corralation between Spotify Technology and New Residential
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.95 times more return on investment than New Residential. However, Spotify Technology is 1.95 times more volatile than New Residential Investment. It trades about 0.29 of its potential returns per unit of risk. New Residential Investment is currently generating about -0.02 per unit of risk. If you would invest 30,300 in Spotify Technology SA on September 3, 2024 and sell it today you would earn a total of 14,845 from holding Spotify Technology SA or generate 48.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. New Residential Investment
Performance |
| Timeline |
| Spotify Technology |
| New Residential Inve |
Spotify Technology and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and New Residential
The main advantage of trading using opposite Spotify Technology and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Catalyst Media Group | Spotify Technology vs. CATLIN GROUP | Spotify Technology vs. Magnora ASA | Spotify Technology vs. RTW Venture Fund |
| New Residential vs. CleanTech Lithium plc | New Residential vs. Pfeiffer Vacuum Technology | New Residential vs. Futura Medical | New Residential vs. Spotify Technology SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |