Correlation Between New Residential and ArcBest
Can any of the company-specific risk be diversified away by investing in both New Residential and ArcBest 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 ArcBest 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 ArcBest, you can compare the effects of market volatilities on New Residential and ArcBest 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 ArcBest. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and ArcBest.
Diversification Opportunities for New Residential and ArcBest
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and ArcBest is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest 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 ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of New Residential i.e., New Residential and ArcBest go up and down completely randomly.
Pair Corralation between New Residential and ArcBest
Assuming the 90 days trading horizon New Residential is expected to generate 1.32 times less return on investment than ArcBest. But when comparing it to its historical volatility, New Residential Investment is 1.14 times less risky than ArcBest. It trades about 0.23 of its potential returns per unit of risk. ArcBest is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 8,900 in ArcBest on October 25, 2024 and sell it today you would earn a total of 650.00 from holding ArcBest or generate 7.3% 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. ArcBest
Performance |
| Timeline |
| New Residential Inve |
| ArcBest |
New Residential and ArcBest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and ArcBest
The main advantage of trading using opposite New Residential and ArcBest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, ArcBest 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 ArcBest will offset losses from the drop in ArcBest's long position.| New Residential vs. PLAYTIKA HOLDING DL 01 | New Residential vs. Ameriprise Financial | New Residential vs. Playtech plc | New Residential vs. PLAYWAY SA ZY 10 |
| ArcBest vs. Hyster Yale Materials Handling | ArcBest vs. VULCAN MATERIALS | ArcBest vs. Telecom Argentina SA | ArcBest vs. Rayonier Advanced Materials |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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