Correlation Between New Residential and ZURICH INSURANCE
Can any of the company-specific risk be diversified away by investing in both New Residential and ZURICH INSURANCE 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 ZURICH INSURANCE 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 ZURICH INSURANCE GROUP, you can compare the effects of market volatilities on New Residential and ZURICH INSURANCE 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 ZURICH INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and ZURICH INSURANCE.
Diversification Opportunities for New Residential and ZURICH INSURANCE
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and ZURICH is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and ZURICH INSURANCE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZURICH INSURANCE 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 ZURICH INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZURICH INSURANCE has no effect on the direction of New Residential i.e., New Residential and ZURICH INSURANCE go up and down completely randomly.
Pair Corralation between New Residential and ZURICH INSURANCE
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.1 times more return on investment than ZURICH INSURANCE. However, New Residential is 1.1 times more volatile than ZURICH INSURANCE GROUP. It trades about 0.12 of its potential returns per unit of risk. ZURICH INSURANCE GROUP is currently generating about 0.07 per unit of risk. If you would invest 597.00 in New Residential Investment on November 3, 2024 and sell it today you would earn a total of 510.00 from holding New Residential Investment or generate 85.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. ZURICH INSURANCE GROUP
Performance |
| Timeline |
| New Residential Inve |
| ZURICH INSURANCE |
New Residential and ZURICH INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and ZURICH INSURANCE
The main advantage of trading using opposite New Residential and ZURICH INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, ZURICH INSURANCE 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 ZURICH INSURANCE will offset losses from the drop in ZURICH INSURANCE's long position.| New Residential vs. Zijin Mining Group | New Residential vs. Harmony Gold Mining | New Residential vs. Tradegate AG Wertpapierhandelsbank | New Residential vs. Perseus Mining Limited |
| ZURICH INSURANCE vs. China Communications Services | ZURICH INSURANCE vs. Minerals Technologies | ZURICH INSURANCE vs. Citic Telecom International | ZURICH INSURANCE vs. HUTCHISON TELECOMM |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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