Correlation Between New Residential and Mitsubishi
Can any of the company-specific risk be diversified away by investing in both New Residential and Mitsubishi 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 Mitsubishi 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 Mitsubishi, you can compare the effects of market volatilities on New Residential and Mitsubishi 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 Mitsubishi. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Mitsubishi.
Diversification Opportunities for New Residential and Mitsubishi
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Mitsubishi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Mitsubishi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi 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 Mitsubishi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi has no effect on the direction of New Residential i.e., New Residential and Mitsubishi go up and down completely randomly.
Pair Corralation between New Residential and Mitsubishi
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.53 times more return on investment than Mitsubishi. However, New Residential Investment is 1.87 times less risky than Mitsubishi. It trades about 0.48 of its potential returns per unit of risk. Mitsubishi is currently generating about 0.05 per unit of risk. If you would invest 956.00 in New Residential Investment on September 4, 2024 and sell it today you would earn a total of 102.00 from holding New Residential Investment or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
New Residential Investment vs. Mitsubishi
Performance |
| Timeline |
| New Residential Inve |
| Mitsubishi |
New Residential and Mitsubishi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Mitsubishi
The main advantage of trading using opposite New Residential and Mitsubishi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Mitsubishi 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 Mitsubishi will offset losses from the drop in Mitsubishi's long position.| New Residential vs. Tower One Wireless | New Residential vs. Cars Inc | New Residential vs. CITY OFFICE REIT | New Residential vs. KENEDIX OFFICE INV |
| Mitsubishi vs. National Retail Properties | Mitsubishi vs. Luckin Coffee | Mitsubishi vs. Fast Retailing Co | Mitsubishi vs. Japan Tobacco |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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