Correlation Between New Residential and Delta Air
Can any of the company-specific risk be diversified away by investing in both New Residential and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on New Residential and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Delta Air.
Diversification Opportunities for New Residential and Delta Air
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Delta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of New Residential i.e., New Residential and Delta Air go up and down completely randomly.
Pair Corralation between New Residential and Delta Air
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.39 times more return on investment than Delta Air. However, New Residential Investment is 2.54 times less risky than Delta Air. It trades about 0.21 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.14 per unit of risk. If you would invest 1,092 in New Residential Investment on November 29, 2024 and sell it today you would earn a total of 52.00 from holding New Residential Investment or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Delta Air Lines
Performance |
| Timeline |
| New Residential Inve |
| Delta Air Lines |
New Residential and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Delta Air
The main advantage of trading using opposite New Residential and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| New Residential vs. JAPAN AIRLINES | New Residential vs. Southwest Airlines Co | New Residential vs. CDL INVESTMENT | New Residential vs. AEGEAN AIRLINES |
| Delta Air vs. GOME Retail Holdings | Delta Air vs. GEELY AUTOMOBILE | Delta Air vs. FAST RETAIL ADR | Delta Air vs. Caseys General Stores |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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