Correlation Between New Residential and AECOM
Can any of the company-specific risk be diversified away by investing in both New Residential and AECOM 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 AECOM 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 AECOM, you can compare the effects of market volatilities on New Residential and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and AECOM.
Diversification Opportunities for New Residential and AECOM
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and AECOM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of New Residential i.e., New Residential and AECOM go up and down completely randomly.
Pair Corralation between New Residential and AECOM
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.89 times more return on investment than AECOM. However, New Residential Investment is 1.12 times less risky than AECOM. It trades about 0.23 of its potential returns per unit of risk. AECOM is currently generating about 0.16 per unit of risk. If you would invest 1,020 in New Residential Investment on October 25, 2024 and sell it today you would earn a total of 56.00 from holding New Residential Investment or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. AECOM
Performance |
| Timeline |
| New Residential Inve |
| AECOM |
New Residential and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and AECOM
The main advantage of trading using opposite New Residential and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM'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 |
| AECOM vs. BE Semiconductor Industries | AECOM vs. Tower Semiconductor | AECOM vs. TRAVEL LEISURE DL 01 | AECOM vs. COLUMBIA SPORTSWEAR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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