Correlation Between New Residential and BHP Group
Can any of the company-specific risk be diversified away by investing in both New Residential and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on New Residential and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and BHP Group.
Diversification Opportunities for New Residential and BHP Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and BHP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of New Residential i.e., New Residential and BHP Group go up and down completely randomly.
Pair Corralation between New Residential and BHP Group
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.79 times more return on investment than BHP Group. However, New Residential Investment is 1.27 times less risky than BHP Group. It trades about 0.08 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.01 per unit of risk. If you would invest 642.00 in New Residential Investment on September 14, 2024 and sell it today you would earn a total of 419.00 from holding New Residential Investment or generate 65.26% 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. BHP Group Limited
Performance |
| Timeline |
| New Residential Inve |
| BHP Group Limited |
New Residential and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and BHP Group
The main advantage of trading using opposite New Residential and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| New Residential vs. ATRYS HEALTH SA | New Residential vs. EHEALTH | New Residential vs. Natural Health Trends | New Residential vs. National Beverage Corp |
| BHP Group vs. Chuangs China Investments | BHP Group vs. New Residential Investment | BHP Group vs. CDL INVESTMENT | BHP Group vs. SLR Investment Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |