Correlation Between New Residential and Japan Asia
Can any of the company-specific risk be diversified away by investing in both New Residential and Japan Asia 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 Japan Asia 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 Japan Asia Investment, you can compare the effects of market volatilities on New Residential and Japan Asia 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 Japan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Japan Asia.
Diversification Opportunities for New Residential and Japan Asia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Japan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment 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 Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of New Residential i.e., New Residential and Japan Asia go up and down completely randomly.
Pair Corralation between New Residential and Japan Asia
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.65 times more return on investment than Japan Asia. However, New Residential Investment is 1.54 times less risky than Japan Asia. It trades about 0.42 of its potential returns per unit of risk. Japan Asia Investment is currently generating about 0.18 per unit of risk. If you would invest 964.00 in New Residential Investment on September 2, 2024 and sell it today you would earn a total of 94.00 from holding New Residential Investment or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Japan Asia Investment
Performance |
| Timeline |
| New Residential Inve |
| Japan Asia Investment |
New Residential and Japan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Japan Asia
The main advantage of trading using opposite New Residential and Japan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Japan Asia 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 Japan Asia will offset losses from the drop in Japan Asia's long position.| New Residential vs. The Bank of | New Residential vs. Allianz SE | New Residential vs. Sixt SE | New Residential vs. China Construction Bank |
| Japan Asia vs. Vishay Intertechnology | Japan Asia vs. Siamgas And Petrochemicals | Japan Asia vs. CapitaLand Investment Limited | Japan Asia vs. PKSHA TECHNOLOGY INC |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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