Correlation Between New Residential and Hitachi Construction
Can any of the company-specific risk be diversified away by investing in both New Residential and Hitachi Construction 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 Hitachi Construction 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 Hitachi Construction Machinery, you can compare the effects of market volatilities on New Residential and Hitachi Construction 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 Hitachi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Hitachi Construction.
Diversification Opportunities for New Residential and Hitachi Construction
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Hitachi is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Hitachi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Construction 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 Hitachi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Construction has no effect on the direction of New Residential i.e., New Residential and Hitachi Construction go up and down completely randomly.
Pair Corralation between New Residential and Hitachi Construction
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.66 times more return on investment than Hitachi Construction. However, New Residential Investment is 1.52 times less risky than Hitachi Construction. It trades about 0.08 of its potential returns per unit of risk. Hitachi Construction Machinery is currently generating about 0.01 per unit of risk. If you would invest 642.00 in New Residential Investment on September 16, 2024 and sell it today you would earn a total of 413.00 from holding New Residential Investment or generate 64.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Hitachi Construction Machinery
Performance |
| Timeline |
| New Residential Inve |
| Hitachi Construction |
New Residential and Hitachi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Hitachi Construction
The main advantage of trading using opposite New Residential and Hitachi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Hitachi Construction 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 Hitachi Construction will offset losses from the drop in Hitachi Construction'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 |
| Hitachi Construction vs. Citic Telecom International | Hitachi Construction vs. New Residential Investment | Hitachi Construction vs. Coor Service Management | Hitachi Construction vs. REGAL ASIAN 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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