Correlation Between New Residential and Charter Communications
Can any of the company-specific risk be diversified away by investing in both New Residential and Charter Communications 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 Charter Communications 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 Charter Communications, you can compare the effects of market volatilities on New Residential and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Charter Communications.
Diversification Opportunities for New Residential and Charter Communications
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Charter is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of New Residential i.e., New Residential and Charter Communications go up and down completely randomly.
Pair Corralation between New Residential and Charter Communications
Assuming the 90 days trading horizon New Residential is expected to generate 2.6 times less return on investment than Charter Communications. But when comparing it to its historical volatility, New Residential Investment is 2.54 times less risky than Charter Communications. It trades about 0.07 of its potential returns per unit of risk. Charter Communications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 27,590 in Charter Communications on September 27, 2024 and sell it today you would earn a total of 5,975 from holding Charter Communications or generate 21.66% 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. Charter Communications
Performance |
| Timeline |
| New Residential Inve |
| Charter Communications |
New Residential and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Charter Communications
The main advantage of trading using opposite New Residential and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| New Residential vs. FARM 51 GROUP | New Residential vs. XTANT MEDICAL HLDGS | New Residential vs. Dairy Farm International | New Residential vs. Diamyd Medical AB |
| Charter Communications vs. SALESFORCE INC CDR | Charter Communications vs. New Residential Investment | Charter Communications vs. REINET INVESTMENTS SCA | Charter Communications vs. SEI INVESTMENTS |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |