Correlation Between BYD ELECTRONIC and New Residential
Can any of the company-specific risk be diversified away by investing in both BYD ELECTRONIC 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 BYD ELECTRONIC and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD ELECTRONIC and New Residential Investment, you can compare the effects of market volatilities on BYD ELECTRONIC 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 BYD ELECTRONIC with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD ELECTRONIC and New Residential.
Diversification Opportunities for BYD ELECTRONIC and New Residential
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYD and New is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC 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 BYD ELECTRONIC i.e., BYD ELECTRONIC and New Residential go up and down completely randomly.
Pair Corralation between BYD ELECTRONIC and New Residential
Assuming the 90 days trading horizon BYD ELECTRONIC is expected to generate 2.92 times more return on investment than New Residential. However, BYD ELECTRONIC is 2.92 times more volatile than New Residential Investment. It trades about 0.04 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.07 per unit of risk. If you would invest 253.00 in BYD ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 161.00 from holding BYD ELECTRONIC or generate 63.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD ELECTRONIC vs. New Residential Investment
Performance |
| Timeline |
| BYD ELECTRONIC |
| New Residential Inve |
BYD ELECTRONIC and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD ELECTRONIC and New Residential
The main advantage of trading using opposite BYD ELECTRONIC and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD ELECTRONIC 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.| BYD ELECTRONIC vs. RETAIL FOOD GROUP | BYD ELECTRONIC vs. MOLSON RS BEVERAGE | BYD ELECTRONIC vs. GEELY AUTOMOBILE | BYD ELECTRONIC vs. National Retail Properties |
| New Residential vs. Richardson Electronics | New Residential vs. Clean Energy Fuels | New Residential vs. Renesas Electronics | New Residential vs. METHODE ELECTRONICS |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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