Correlation Between New Residential and Gaming
Can any of the company-specific risk be diversified away by investing in both New Residential and Gaming 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 Gaming 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 Gaming and Leisure, you can compare the effects of market volatilities on New Residential and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Gaming.
Diversification Opportunities for New Residential and Gaming
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Gaming is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of New Residential i.e., New Residential and Gaming go up and down completely randomly.
Pair Corralation between New Residential and Gaming
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.85 times more return on investment than Gaming. However, New Residential Investment is 1.18 times less risky than Gaming. It trades about 0.12 of its potential returns per unit of risk. Gaming and Leisure is currently generating about -0.11 per unit of risk. If you would invest 1,033 in New Residential Investment on October 30, 2024 and sell it today you would earn a total of 50.00 from holding New Residential Investment or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Gaming and Leisure
Performance |
| Timeline |
| New Residential Inve |
| Gaming and Leisure |
New Residential and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Gaming
The main advantage of trading using opposite New Residential and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| New Residential vs. Sunny Optical Technology | New Residential vs. SEKISUI CHEMICAL | New Residential vs. TIANDE CHEMICAL | New Residential vs. Casio Computer CoLtd |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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