Correlation Between New Residential and Trade Desk
Can any of the company-specific risk be diversified away by investing in both New Residential and Trade Desk 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 Trade Desk 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 The Trade Desk, you can compare the effects of market volatilities on New Residential and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Trade Desk.
Diversification Opportunities for New Residential and Trade Desk
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Trade is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of New Residential i.e., New Residential and Trade Desk go up and down completely randomly.
Pair Corralation between New Residential and Trade Desk
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.46 times more return on investment than Trade Desk. However, New Residential Investment is 2.16 times less risky than Trade Desk. It trades about 0.11 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.02 per unit of risk. If you would invest 994.00 in New Residential Investment on October 16, 2024 and sell it today you would earn a total of 48.00 from holding New Residential Investment or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. The Trade Desk
Performance |
| Timeline |
| New Residential Inve |
| Trade Desk |
New Residential and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Trade Desk
The main advantage of trading using opposite New Residential and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| New Residential vs. Monster Beverage Corp | New Residential vs. Motorcar Parts of | New Residential vs. SAN MIGUEL BREWERY | New Residential vs. Warner Music Group |
| Trade Desk vs. G III Apparel Group | Trade Desk vs. New Residential Investment | Trade Desk vs. COFCO Joycome Foods | Trade Desk vs. GWILLI FOOD |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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