Correlation Between New Residential and PENN NATL
Can any of the company-specific risk be diversified away by investing in both New Residential and PENN NATL 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 PENN NATL 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 PENN NATL GAMING, you can compare the effects of market volatilities on New Residential and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and PENN NATL.
Diversification Opportunities for New Residential and PENN NATL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and PENN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of New Residential i.e., New Residential and PENN NATL go up and down completely randomly.
Pair Corralation between New Residential and PENN NATL
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.46 times more return on investment than PENN NATL. However, New Residential Investment is 2.16 times less risky than PENN NATL. It trades about 0.25 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.09 per unit of risk. If you would invest 990.00 in New Residential Investment on August 31, 2024 and sell it today you would earn a total of 62.00 from holding New Residential Investment or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. PENN NATL GAMING
Performance |
| Timeline |
| New Residential Inve |
| PENN NATL GAMING |
New Residential and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and PENN NATL
The main advantage of trading using opposite New Residential and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| New Residential vs. MGIC INVESTMENT | New Residential vs. Perseus Mining Limited | New Residential vs. GRIFFIN MINING LTD | New Residential vs. ECHO INVESTMENT ZY |
| PENN NATL vs. SERI INDUSTRIAL EO | PENN NATL vs. Arrow Electronics | PENN NATL vs. KIMBALL ELECTRONICS | PENN NATL vs. MCEWEN MINING INC |
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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