Correlation Between New Residential and URBAN OUTFITTERS
Can any of the company-specific risk be diversified away by investing in both New Residential and URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS, you can compare the effects of market volatilities on New Residential and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and URBAN OUTFITTERS.
Diversification Opportunities for New Residential and URBAN OUTFITTERS
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and URBAN is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of New Residential i.e., New Residential and URBAN OUTFITTERS go up and down completely randomly.
Pair Corralation between New Residential and URBAN OUTFITTERS
Assuming the 90 days trading horizon New Residential is expected to generate 3.64 times less return on investment than URBAN OUTFITTERS. But when comparing it to its historical volatility, New Residential Investment is 4.44 times less risky than URBAN OUTFITTERS. It trades about 0.48 of its potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,320 in URBAN OUTFITTERS on September 4, 2024 and sell it today you would earn a total of 1,480 from holding URBAN OUTFITTERS or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
New Residential Investment vs. URBAN OUTFITTERS
Performance |
| Timeline |
| New Residential Inve |
| URBAN OUTFITTERS |
New Residential and URBAN OUTFITTERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and URBAN OUTFITTERS
The main advantage of trading using opposite New Residential and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.| New Residential vs. Tower One Wireless | New Residential vs. Cars Inc | New Residential vs. CITY OFFICE REIT | New Residential vs. KENEDIX OFFICE INV |
| URBAN OUTFITTERS vs. TOTAL GABON | URBAN OUTFITTERS vs. Walgreens Boots Alliance | URBAN OUTFITTERS vs. Peak Resources Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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