Correlation Between GoldMining and New Residential
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and New Residential Investment, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and New Residential.
Diversification Opportunities for GoldMining and New Residential
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and New is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and New Residential go up and down completely randomly.
Pair Corralation between GoldMining and New Residential
Assuming the 90 days trading horizon GoldMining is expected to under-perform the New Residential. In addition to that, GoldMining is 2.69 times more volatile than New Residential Investment. It trades about -0.01 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.06 per unit of volatility. If you would invest 953.00 in New Residential Investment on September 2, 2024 and sell it today you would earn a total of 177.00 from holding New Residential Investment or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 45.2% |
| Values | Daily Returns |
GoldMining vs. New Residential Investment
Performance |
| Timeline |
| GoldMining |
| New Residential Inve |
GoldMining and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and New Residential
The main advantage of trading using opposite GoldMining and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. European Metals Holdings | GoldMining vs. Cornish Metals | GoldMining vs. Virgin Wines UK | GoldMining vs. Gaztransport et Technigaz |
| New Residential vs. Uniper SE | New Residential vs. Mulberry Group PLC | New Residential vs. London Security Plc | New Residential vs. Triad Group PLC |
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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