Correlation Between New Residential and UET United
Can any of the company-specific risk be diversified away by investing in both New Residential and UET United 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 UET United 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 UET United Electronic, you can compare the effects of market volatilities on New Residential and UET United 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 UET United. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and UET United.
Diversification Opportunities for New Residential and UET United
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and UET is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and UET United Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UET United Electronic 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 UET United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UET United Electronic has no effect on the direction of New Residential i.e., New Residential and UET United go up and down completely randomly.
Pair Corralation between New Residential and UET United
Assuming the 90 days trading horizon New Residential is expected to generate 4.33 times less return on investment than UET United. But when comparing it to its historical volatility, New Residential Investment is 7.01 times less risky than UET United. It trades about 0.23 of its potential returns per unit of risk. UET United Electronic is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 81.00 in UET United Electronic on September 13, 2024 and sell it today you would earn a total of 14.00 from holding UET United Electronic or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. UET United Electronic
Performance |
| Timeline |
| New Residential Inve |
| UET United Electronic |
New Residential and UET United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and UET United
The main advantage of trading using opposite New Residential and UET United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, UET United 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 UET United will offset losses from the drop in UET United's long position.| New Residential vs. PLAYTIKA HOLDING DL 01 | New Residential vs. Nine Dragons Paper | New Residential vs. Sunstone Hotel Investors | New Residential vs. Onxeo SA |
| UET United vs. Cisco Systems | UET United vs. Nokia | UET United vs. Hewlett Packard Enterprise | UET United vs. Superior Plus 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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