Correlation Between New Residential and NEXON
Can any of the company-specific risk be diversified away by investing in both New Residential and NEXON 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 NEXON 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 NEXON Co, you can compare the effects of market volatilities on New Residential and NEXON 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 NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and NEXON.
Diversification Opportunities for New Residential and NEXON
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and NEXON is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON 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 NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of New Residential i.e., New Residential and NEXON go up and down completely randomly.
Pair Corralation between New Residential and NEXON
Assuming the 90 days trading horizon New Residential Investment is expected to under-perform the NEXON. But the stock apears to be less risky and, when comparing its historical volatility, New Residential Investment is 2.11 times less risky than NEXON. The stock trades about -0.06 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,280 in NEXON Co on September 27, 2024 and sell it today you would earn a total of 120.00 from holding NEXON Co or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. NEXON Co
Performance |
| Timeline |
| New Residential Inve |
| NEXON |
New Residential and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and NEXON
The main advantage of trading using opposite New Residential and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, NEXON 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 NEXON will offset losses from the drop in NEXON's long position.| New Residential vs. FARM 51 GROUP | New Residential vs. XTANT MEDICAL HLDGS | New Residential vs. Dairy Farm International | New Residential vs. Diamyd Medical AB |
| NEXON vs. New Residential Investment | NEXON vs. REGAL ASIAN INVESTMENTS | NEXON vs. Virtus Investment Partners | NEXON vs. Gladstone 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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