Correlation Between New Residential and SLR Investment
Can any of the company-specific risk be diversified away by investing in both New Residential and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on New Residential and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and SLR Investment.
Diversification Opportunities for New Residential and SLR Investment
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and SLR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of New Residential i.e., New Residential and SLR Investment go up and down completely randomly.
Pair Corralation between New Residential and SLR Investment
Assuming the 90 days trading horizon New Residential is expected to generate 1.18 times less return on investment than SLR Investment. In addition to that, New Residential is 1.06 times more volatile than SLR Investment Corp. It trades about 0.07 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.09 per unit of volatility. If you would invest 1,255 in SLR Investment Corp on August 31, 2024 and sell it today you would earn a total of 315.00 from holding SLR Investment Corp or generate 25.1% 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. SLR Investment Corp
Performance |
| Timeline |
| New Residential Inve |
| SLR Investment Corp |
New Residential and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and SLR Investment
The main advantage of trading using opposite New Residential and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment'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 |
| SLR Investment vs. Astral Foods Limited | SLR Investment vs. Collins Foods Limited | SLR Investment vs. United Natural Foods | SLR Investment vs. GRIFFIN MINING LTD |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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