Correlation Between New Residential and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both New Residential and ECHO INVESTMENT 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 ECHO INVESTMENT 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 ECHO INVESTMENT ZY, you can compare the effects of market volatilities on New Residential and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and ECHO INVESTMENT.
Diversification Opportunities for New Residential and ECHO INVESTMENT
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and ECHO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of New Residential i.e., New Residential and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between New Residential and ECHO INVESTMENT
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.7 times more return on investment than ECHO INVESTMENT. However, New Residential Investment is 1.44 times less risky than ECHO INVESTMENT. It trades about 0.36 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.01 per unit of risk. If you would invest 965.00 in New Residential Investment on August 29, 2024 and sell it today you would earn a total of 95.00 from holding New Residential Investment or generate 9.84% 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. ECHO INVESTMENT ZY
Performance |
| Timeline |
| New Residential Inve |
| ECHO INVESTMENT ZY |
New Residential and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and ECHO INVESTMENT
The main advantage of trading using opposite New Residential and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| New Residential vs. Lyxor 1 | New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX |
| ECHO INVESTMENT vs. MGIC INVESTMENT | ECHO INVESTMENT vs. REGAL ASIAN INVESTMENTS | ECHO INVESTMENT vs. FORWARD AIR P | ECHO INVESTMENT vs. Wizz Air Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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