Correlation Between New Residential and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both New Residential and Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare, you can compare the effects of market volatilities on New Residential and Molina Healthcare 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 Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Molina Healthcare.
Diversification Opportunities for New Residential and Molina Healthcare
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Molina is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare 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 Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of New Residential i.e., New Residential and Molina Healthcare go up and down completely randomly.
Pair Corralation between New Residential and Molina Healthcare
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.96 times more return on investment than Molina Healthcare. However, New Residential Investment is 1.04 times less risky than Molina Healthcare. It trades about 0.1 of its potential returns per unit of risk. Molina Healthcare is currently generating about 0.05 per unit of risk. If you would invest 1,039 in New Residential Investment on October 13, 2024 and sell it today you would earn a total of 22.00 from holding New Residential Investment or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Molina Healthcare
Performance |
| Timeline |
| New Residential Inve |
| Molina Healthcare |
New Residential and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Molina Healthcare
The main advantage of trading using opposite New Residential and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Molina Healthcare 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 Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.| New Residential vs. Ryohin Keikaku Co | New Residential vs. Deutsche Telekom AG | New Residential vs. BE Semiconductor Industries | New Residential vs. CRAWFORD A NV |
| Molina Healthcare vs. Geely Automobile Holdings | Molina Healthcare vs. New Residential Investment | Molina Healthcare vs. T MOBILE INCDL 00001 | Molina Healthcare vs. Charter Communications |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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