Correlation Between Postal Savings and New Residential
Can any of the company-specific risk be diversified away by investing in both Postal Savings and New Residential 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 Postal Savings and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and New Residential Investment, you can compare the effects of market volatilities on Postal Savings and New Residential 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 Postal Savings with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and New Residential.
Diversification Opportunities for Postal Savings and New Residential
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Postal and New is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Postal Savings 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 Postal Savings Bank are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Postal Savings i.e., Postal Savings and New Residential go up and down completely randomly.
Pair Corralation between Postal Savings and New Residential
Assuming the 90 days horizon Postal Savings is expected to generate 1.09 times less return on investment than New Residential. In addition to that, Postal Savings is 1.38 times more volatile than New Residential Investment. It trades about 0.14 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.21 per unit of volatility. If you would invest 1,021 in New Residential Investment on September 15, 2024 and sell it today you would earn a total of 43.00 from holding New Residential Investment or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. New Residential Investment
Performance |
| Timeline |
| Postal Savings Bank |
| New Residential Inve |
Postal Savings and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and New Residential
The main advantage of trading using opposite Postal Savings and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Postal Savings vs. POSBO UNSPADRS20YC1 | Postal Savings vs. UTD OV BK LOC ADR1 | Postal Savings vs. Superior Plus Corp | Postal Savings vs. SIVERS SEMICONDUCTORS AB |
| New Residential vs. PLAYTIKA HOLDING DL 01 | New Residential vs. Nine Dragons Paper | New Residential vs. Sunstone Hotel Investors | New Residential vs. Onxeo SA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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