Correlation Between New Residential and KENEDIX OFFICE
Can any of the company-specific risk be diversified away by investing in both New Residential and KENEDIX OFFICE 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 KENEDIX OFFICE 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 KENEDIX OFFICE INV, you can compare the effects of market volatilities on New Residential and KENEDIX OFFICE 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 KENEDIX OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and KENEDIX OFFICE.
Diversification Opportunities for New Residential and KENEDIX OFFICE
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and KENEDIX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and KENEDIX OFFICE INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENEDIX OFFICE INV 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 KENEDIX OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENEDIX OFFICE INV has no effect on the direction of New Residential i.e., New Residential and KENEDIX OFFICE go up and down completely randomly.
Pair Corralation between New Residential and KENEDIX OFFICE
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.6 times more return on investment than KENEDIX OFFICE. However, New Residential Investment is 1.66 times less risky than KENEDIX OFFICE. It trades about 0.11 of its potential returns per unit of risk. KENEDIX OFFICE INV is currently generating about 0.03 per unit of risk. If you would invest 1,036 in New Residential Investment on October 12, 2024 and sell it today you would earn a total of 24.00 from holding New Residential Investment or generate 2.32% 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. KENEDIX OFFICE INV
Performance |
| Timeline |
| New Residential Inve |
| KENEDIX OFFICE INV |
New Residential and KENEDIX OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and KENEDIX OFFICE
The main advantage of trading using opposite New Residential and KENEDIX OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, KENEDIX OFFICE 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 KENEDIX OFFICE will offset losses from the drop in KENEDIX OFFICE's long position.| New Residential vs. SEKISUI CHEMICAL | New Residential vs. ATRESMEDIA | New Residential vs. Sinopec Shanghai Petrochemical | New Residential vs. CNVISION MEDIA |
| KENEDIX OFFICE vs. Carnegie Clean Energy | KENEDIX OFFICE vs. CVW CLEANTECH INC | KENEDIX OFFICE vs. AWILCO DRILLING PLC | KENEDIX OFFICE vs. New Residential Investment |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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