Correlation Between New Residential and US Physical
Can any of the company-specific risk be diversified away by investing in both New Residential and US Physical 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 US Physical 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 US Physical Therapy, you can compare the effects of market volatilities on New Residential and US Physical 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 US Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and US Physical.
Diversification Opportunities for New Residential and US Physical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and UPH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and US Physical Therapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physical Therapy 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 US Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physical Therapy has no effect on the direction of New Residential i.e., New Residential and US Physical go up and down completely randomly.
Pair Corralation between New Residential and US Physical
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.66 times more return on investment than US Physical. However, New Residential Investment is 1.51 times less risky than US Physical. It trades about 0.07 of its potential returns per unit of risk. US Physical Therapy is currently generating about 0.01 per unit of risk. If you would invest 712.00 in New Residential Investment on November 1, 2024 and sell it today you would earn a total of 380.00 from holding New Residential Investment or generate 53.37% 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. US Physical Therapy
Performance |
| Timeline |
| New Residential Inve |
| US Physical Therapy |
New Residential and US Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and US Physical
The main advantage of trading using opposite New Residential and US Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, US Physical 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 US Physical will offset losses from the drop in US Physical's long position.| New Residential vs. CarsalesCom | New Residential vs. SIDETRADE EO 1 | New Residential vs. Nordic Semiconductor ASA | New Residential vs. Tower Semiconductor |
| US Physical vs. Entravision Communications | US Physical vs. AGNC INVESTMENT | US Physical vs. New Residential Investment | US Physical vs. Ribbon Communications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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