Correlation Between New Residential and Media
Can any of the company-specific risk be diversified away by investing in both New Residential and Media 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 Media 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 Media and Games, you can compare the effects of market volatilities on New Residential and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Media.
Diversification Opportunities for New Residential and Media
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Media is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of New Residential i.e., New Residential and Media go up and down completely randomly.
Pair Corralation between New Residential and Media
Assuming the 90 days trading horizon New Residential is expected to generate 3.12 times less return on investment than Media. But when comparing it to its historical volatility, New Residential Investment is 3.26 times less risky than Media. It trades about 0.23 of its potential returns per unit of risk. Media and Games is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 338.00 in Media and Games on August 25, 2024 and sell it today you would earn a total of 62.00 from holding Media and Games or generate 18.34% 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. Media and Games
Performance |
| Timeline |
| New Residential Inve |
| Media and Games |
New Residential and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Media
The main advantage of trading using opposite New Residential and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX | New Residential vs. Lyxor 1 |
| Media vs. GALENA MINING LTD | Media vs. New Residential Investment | Media vs. Chuangs China Investments | Media vs. CDL 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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