Correlation Between New Residential and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both New Residential and NAKED WINES 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 NAKED WINES 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 NAKED WINES PLC, you can compare the effects of market volatilities on New Residential and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and NAKED WINES.
Diversification Opportunities for New Residential and NAKED WINES
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and NAKED is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of New Residential i.e., New Residential and NAKED WINES go up and down completely randomly.
Pair Corralation between New Residential and NAKED WINES
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.31 times more return on investment than NAKED WINES. However, New Residential Investment is 3.19 times less risky than NAKED WINES. It trades about 0.08 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.03 per unit of risk. If you would invest 677.00 in New Residential Investment on October 12, 2024 and sell it today you would earn a total of 383.00 from holding New Residential Investment or generate 56.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. NAKED WINES PLC
Performance |
| Timeline |
| New Residential Inve |
| NAKED WINES PLC |
New Residential and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and NAKED WINES
The main advantage of trading using opposite New Residential and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| New Residential vs. SEKISUI CHEMICAL | New Residential vs. ATRESMEDIA | New Residential vs. Sinopec Shanghai Petrochemical | New Residential vs. CNVISION MEDIA |
| NAKED WINES vs. New Residential Investment | NAKED WINES vs. WisdomTree Investments | NAKED WINES vs. ECHO INVESTMENT ZY | NAKED WINES vs. SEI 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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