Correlation Between New Residential and Air Lease
Can any of the company-specific risk be diversified away by investing in both New Residential and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on New Residential and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Air Lease.
Diversification Opportunities for New Residential and Air Lease
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Air is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of New Residential i.e., New Residential and Air Lease go up and down completely randomly.
Pair Corralation between New Residential and Air Lease
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.55 times more return on investment than Air Lease. However, New Residential Investment is 1.82 times less risky than Air Lease. It trades about 0.07 of its potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of risk. If you would invest 947.00 in New Residential Investment on October 17, 2024 and sell it today you would earn a total of 100.00 from holding New Residential Investment or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Air Lease
Performance |
| Timeline |
| New Residential Inve |
| Air Lease |
New Residential and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Air Lease
The main advantage of trading using opposite New Residential and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease'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 |
| Air Lease vs. MEDCAW INVESTMENTS LS 01 | Air Lease vs. PARKEN Sport Entertainment | Air Lease vs. New Residential Investment | Air Lease vs. MidCap Financial 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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