Correlation Between New Residential and Performance Food
Can any of the company-specific risk be diversified away by investing in both New Residential and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on New Residential and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Performance Food.
Diversification Opportunities for New Residential and Performance Food
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Performance is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of New Residential i.e., New Residential and Performance Food go up and down completely randomly.
Pair Corralation between New Residential and Performance Food
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.4 times more return on investment than Performance Food. However, New Residential is 1.4 times more volatile than Performance Food Group. It trades about 0.14 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.35 per unit of risk. If you would invest 1,028 in New Residential Investment on October 11, 2024 and sell it today you would earn a total of 32.00 from holding New Residential Investment or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
New Residential Investment vs. Performance Food Group
Performance |
| Timeline |
| New Residential Inve |
| Performance Food |
New Residential and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Performance Food
The main advantage of trading using opposite New Residential and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| New Residential vs. China BlueChemical | New Residential vs. Merit Medical Systems | New Residential vs. ENVVENO MEDICAL DL 00001 | New Residential vs. SCANSOURCE |
| Performance Food vs. SEI INVESTMENTS | Performance Food vs. JLF INVESTMENT | Performance Food vs. Japan Asia Investment | Performance Food vs. New Residential Investment |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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