Correlation Between New Residential and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both New Residential and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on New Residential and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Advanced Medical.
Diversification Opportunities for New Residential and Advanced Medical
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Advanced is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of New Residential i.e., New Residential and Advanced Medical go up and down completely randomly.
Pair Corralation between New Residential and Advanced Medical
Assuming the 90 days trading horizon New Residential is expected to generate 1.32 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, New Residential Investment is 2.75 times less risky than Advanced Medical. It trades about 0.15 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 232.00 in Advanced Medical Solutions on October 17, 2024 and sell it today you would earn a total of 16.00 from holding Advanced Medical Solutions or generate 6.9% 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. Advanced Medical Solutions
Performance |
| Timeline |
| New Residential Inve |
| Advanced Medical Sol |
New Residential and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Advanced Medical
The main advantage of trading using opposite New Residential and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| New Residential vs. Monster Beverage Corp | New Residential vs. Motorcar Parts of | New Residential vs. SAN MIGUEL BREWERY | New Residential vs. Warner Music Group |
| Advanced Medical vs. Computershare Limited | Advanced Medical vs. New Residential Investment | Advanced Medical vs. GMO Internet | Advanced Medical vs. Rocket Internet SE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |