Correlation Between New Residential and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both New Residential and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on New Residential and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Hollywood Bowl.
Diversification Opportunities for New Residential and Hollywood Bowl
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Hollywood is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of New Residential i.e., New Residential and Hollywood Bowl go up and down completely randomly.
Pair Corralation between New Residential and Hollywood Bowl
Assuming the 90 days trading horizon New Residential is expected to generate 1.14 times less return on investment than Hollywood Bowl. But when comparing it to its historical volatility, New Residential Investment is 1.43 times less risky than Hollywood Bowl. It trades about 0.07 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Hollywood Bowl Group on September 3, 2024 and sell it today you would earn a total of 142.00 from holding Hollywood Bowl Group or generate 60.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Hollywood Bowl Group
Performance |
| Timeline |
| New Residential Inve |
| Hollywood Bowl Group |
New Residential and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Hollywood Bowl
The main advantage of trading using opposite New Residential and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| New Residential vs. Richardson Electronics | New Residential vs. Clean Energy Fuels | New Residential vs. Renesas Electronics | New Residential vs. METHODE ELECTRONICS |
| Hollywood Bowl vs. ECHO INVESTMENT ZY | Hollywood Bowl vs. SPORTING | Hollywood Bowl vs. New Residential Investment | Hollywood Bowl vs. MGIC INVESTMENT |
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 CEOs Directory module to screen CEOs from public companies around the world.
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