Correlation Between New Residential and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both New Residential and GOODYEAR T 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 GOODYEAR T 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 GOODYEAR T RUBBER, you can compare the effects of market volatilities on New Residential and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and GOODYEAR T.
Diversification Opportunities for New Residential and GOODYEAR T
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and GOODYEAR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of New Residential i.e., New Residential and GOODYEAR T go up and down completely randomly.
Pair Corralation between New Residential and GOODYEAR T
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.46 times more return on investment than GOODYEAR T. However, New Residential Investment is 2.16 times less risky than GOODYEAR T. It trades about 0.07 of its potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.0 per unit of risk. If you would invest 692.00 in New Residential Investment on October 29, 2024 and sell it today you would earn a total of 384.00 from holding New Residential Investment or generate 55.49% 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. GOODYEAR T RUBBER
Performance |
| Timeline |
| New Residential Inve |
| GOODYEAR T RUBBER |
New Residential and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and GOODYEAR T
The main advantage of trading using opposite New Residential and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| New Residential vs. CHINA HUARONG ENERHD 50 | New Residential vs. Huntington Bancshares Incorporated | New Residential vs. NorAm Drilling AS | New Residential vs. Rheinmetall AG |
| GOODYEAR T vs. CARSALESCOM | GOODYEAR T vs. UNIQA INSURANCE GR | GOODYEAR T vs. China Eastern Airlines | GOODYEAR T vs. Reinsurance Group of |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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