Correlation Between New Residential and BYD ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both New Residential and BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC, you can compare the effects of market volatilities on New Residential and BYD ELECTRONIC 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 BYD ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and BYD ELECTRONIC.
Diversification Opportunities for New Residential and BYD ELECTRONIC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and BYD is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and BYD ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD ELECTRONIC 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 BYD ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD ELECTRONIC has no effect on the direction of New Residential i.e., New Residential and BYD ELECTRONIC go up and down completely randomly.
Pair Corralation between New Residential and BYD ELECTRONIC
Assuming the 90 days trading horizon New Residential is expected to generate 1.76 times less return on investment than BYD ELECTRONIC. But when comparing it to its historical volatility, New Residential Investment is 2.92 times less risky than BYD ELECTRONIC. It trades about 0.07 of its potential returns per unit of risk. BYD ELECTRONIC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 253.00 in BYD ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 161.00 from holding BYD ELECTRONIC or generate 63.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. BYD ELECTRONIC
Performance |
| Timeline |
| New Residential Inve |
| BYD ELECTRONIC |
New Residential and BYD ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and BYD ELECTRONIC
The main advantage of trading using opposite New Residential and BYD ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, BYD ELECTRONIC 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 BYD ELECTRONIC will offset losses from the drop in BYD ELECTRONIC's long position.| New Residential vs. Richardson Electronics | New Residential vs. Clean Energy Fuels | New Residential vs. Renesas Electronics | New Residential vs. METHODE ELECTRONICS |
| BYD ELECTRONIC vs. RETAIL FOOD GROUP | BYD ELECTRONIC vs. MOLSON RS BEVERAGE | BYD ELECTRONIC vs. GEELY AUTOMOBILE | BYD ELECTRONIC vs. National Retail Properties |
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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