Correlation Between New Residential and CLOVER HEALTH
Can any of the company-specific risk be diversified away by investing in both New Residential and CLOVER HEALTH 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 CLOVER HEALTH 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 CLOVER HEALTH INV, you can compare the effects of market volatilities on New Residential and CLOVER HEALTH 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 CLOVER HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and CLOVER HEALTH.
Diversification Opportunities for New Residential and CLOVER HEALTH
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and CLOVER is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and CLOVER HEALTH INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOVER HEALTH INV 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 CLOVER HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOVER HEALTH INV has no effect on the direction of New Residential i.e., New Residential and CLOVER HEALTH go up and down completely randomly.
Pair Corralation between New Residential and CLOVER HEALTH
Assuming the 90 days trading horizon New Residential is expected to generate 13.9 times less return on investment than CLOVER HEALTH. But when comparing it to its historical volatility, New Residential Investment is 5.4 times less risky than CLOVER HEALTH. It trades about 0.07 of its potential returns per unit of risk. CLOVER HEALTH INV is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 101.00 in CLOVER HEALTH INV on October 17, 2024 and sell it today you would earn a total of 259.00 from holding CLOVER HEALTH INV or generate 256.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
New Residential Investment vs. CLOVER HEALTH INV
Performance |
| Timeline |
| New Residential Inve |
| CLOVER HEALTH INV |
New Residential and CLOVER HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and CLOVER HEALTH
The main advantage of trading using opposite New Residential and CLOVER HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, CLOVER HEALTH 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 CLOVER HEALTH will offset losses from the drop in CLOVER HEALTH's long position.| New Residential vs. Ryohin Keikaku Co | New Residential vs. Deutsche Telekom AG | New Residential vs. BE Semiconductor Industries | New Residential vs. CRAWFORD A NV |
| CLOVER HEALTH vs. DIVERSIFIED ROYALTY | CLOVER HEALTH vs. New Residential Investment | CLOVER HEALTH vs. Apollo Investment Corp | CLOVER HEALTH vs. CDL 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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