Correlation Between New Residential and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both New Residential and Ambac Financial 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 Ambac Financial 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 Ambac Financial Group, you can compare the effects of market volatilities on New Residential and Ambac Financial 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 Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Ambac Financial.
Diversification Opportunities for New Residential and Ambac Financial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Ambac is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group 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 Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of New Residential i.e., New Residential and Ambac Financial go up and down completely randomly.
Pair Corralation between New Residential and Ambac Financial
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.51 times more return on investment than Ambac Financial. However, New Residential Investment is 1.95 times less risky than Ambac Financial. It trades about 0.1 of its potential returns per unit of risk. Ambac Financial Group is currently generating about -0.03 per unit of risk. If you would invest 598.00 in New Residential Investment on December 10, 2024 and sell it today you would earn a total of 490.00 from holding New Residential Investment or generate 81.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Ambac Financial Group
Performance |
| Timeline |
| New Residential Inve |
| Ambac Financial Group |
New Residential and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Ambac Financial
The main advantage of trading using opposite New Residential and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Ambac Financial 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 Ambac Financial will offset losses from the drop in Ambac Financial's long position.| New Residential vs. Axway Software SA | New Residential vs. Kingdee International Software | New Residential vs. Sinopec Shanghai Petrochemical | New Residential vs. Alfa Financial Software |
| Ambac Financial vs. CAREER EDUCATION | Ambac Financial vs. Grand Canyon Education | Ambac Financial vs. Corporate Travel Management | Ambac Financial vs. Laureate Education |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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