Correlation Between New Residential and Pure Storage
Can any of the company-specific risk be diversified away by investing in both New Residential and Pure Storage 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 Pure Storage 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 Pure Storage, you can compare the effects of market volatilities on New Residential and Pure Storage 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 Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Pure Storage.
Diversification Opportunities for New Residential and Pure Storage
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Pure is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage 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 Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of New Residential i.e., New Residential and Pure Storage go up and down completely randomly.
Pair Corralation between New Residential and Pure Storage
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.64 times more return on investment than Pure Storage. However, New Residential Investment is 1.57 times less risky than Pure Storage. It trades about 0.4 of its potential returns per unit of risk. Pure Storage is currently generating about 0.11 per unit of risk. If you would invest 1,020 in New Residential Investment on October 23, 2024 and sell it today you would earn a total of 86.00 from holding New Residential Investment or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Pure Storage
Performance |
| Timeline |
| New Residential Inve |
| Pure Storage |
New Residential and Pure Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Pure Storage
The main advantage of trading using opposite New Residential and Pure Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Pure Storage 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 Pure Storage will offset losses from the drop in Pure Storage's long position.| New Residential vs. Verizon Communications | New Residential vs. MICRONIC MYDATA | New Residential vs. Cass Information Systems | New Residential vs. DATATEC LTD 2 |
| Pure Storage vs. AGNC INVESTMENT | Pure Storage vs. ECHO INVESTMENT ZY | Pure Storage vs. CHRYSALIS INVESTMENTS LTD | Pure Storage vs. New Residential 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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