Correlation Between New Residential and Marubeni
Can any of the company-specific risk be diversified away by investing in both New Residential and Marubeni 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 Marubeni 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 Marubeni, you can compare the effects of market volatilities on New Residential and Marubeni 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 Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Marubeni.
Diversification Opportunities for New Residential and Marubeni
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Marubeni is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of New Residential i.e., New Residential and Marubeni go up and down completely randomly.
Pair Corralation between New Residential and Marubeni
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.6 times more return on investment than Marubeni. However, New Residential Investment is 1.67 times less risky than Marubeni. It trades about 0.36 of its potential returns per unit of risk. Marubeni is currently generating about 0.06 per unit of risk. If you would invest 973.00 in New Residential Investment on September 1, 2024 and sell it today you would earn a total of 85.00 from holding New Residential Investment or generate 8.74% 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. Marubeni
Performance |
| Timeline |
| New Residential Inve |
| Marubeni |
New Residential and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Marubeni
The main advantage of trading using opposite New Residential and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.| New Residential vs. TRAINLINE PLC LS | New Residential vs. Soken Chemical Engineering | New Residential vs. Siamgas And Petrochemicals | New Residential vs. SEKISUI CHEMICAL |
| Marubeni vs. New Residential Investment | Marubeni vs. TROPHY GAMES DEV | Marubeni vs. OURGAME INTHOLDL 00005 | Marubeni vs. WisdomTree 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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