Correlation Between BLUESCOPE STEEL and New Residential
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL 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 BLUESCOPE STEEL and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and New Residential Investment, you can compare the effects of market volatilities on BLUESCOPE STEEL 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 BLUESCOPE STEEL with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and New Residential.
Diversification Opportunities for BLUESCOPE STEEL and New Residential
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BLUESCOPE and New is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL i.e., BLUESCOPE STEEL and New Residential go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and New Residential
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 2.07 times more return on investment than New Residential. However, BLUESCOPE STEEL is 2.07 times more volatile than New Residential Investment. It trades about 0.09 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.03 per unit of risk. If you would invest 1,209 in BLUESCOPE STEEL on September 2, 2024 and sell it today you would earn a total of 141.00 from holding BLUESCOPE STEEL or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. New Residential Investment
Performance |
| Timeline |
| BLUESCOPE STEEL |
| New Residential Inve |
BLUESCOPE STEEL and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and New Residential
The main advantage of trading using opposite BLUESCOPE STEEL and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL 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.| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
| New Residential vs. The Bank of | New Residential vs. Allianz SE | New Residential vs. Sixt SE | New Residential vs. China Construction Bank |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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