Correlation Between New Residential and ITV Plc
Can any of the company-specific risk be diversified away by investing in both New Residential and ITV Plc 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 ITV Plc 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 ITV plc, you can compare the effects of market volatilities on New Residential and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and ITV Plc.
Diversification Opportunities for New Residential and ITV Plc
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and ITV is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of New Residential i.e., New Residential and ITV Plc go up and down completely randomly.
Pair Corralation between New Residential and ITV Plc
Assuming the 90 days trading horizon New Residential is expected to generate 2.95 times less return on investment than ITV Plc. But when comparing it to its historical volatility, New Residential Investment is 2.66 times less risky than ITV Plc. It trades about 0.26 of its potential returns per unit of risk. ITV plc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 76.00 in ITV plc on September 13, 2024 and sell it today you would earn a total of 12.00 from holding ITV plc or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
New Residential Investment vs. ITV plc
Performance |
| Timeline |
| New Residential Inve |
| ITV plc |
New Residential and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and ITV Plc
The main advantage of trading using opposite New Residential and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| New Residential vs. ATRYS HEALTH SA | New Residential vs. EHEALTH | New Residential vs. Natural Health Trends | New Residential vs. National Beverage Corp |
| ITV Plc vs. New Residential Investment | ITV Plc vs. Gladstone Investment | ITV Plc vs. AGNC INVESTMENT | ITV Plc vs. AOYAMA TRADING |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Transaction History View history of all your transactions and understand their impact on performance |