Correlation Between Bunzl PLC and New Residential
Can any of the company-specific risk be diversified away by investing in both Bunzl PLC 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 Bunzl PLC and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl PLC and New Residential Investment, you can compare the effects of market volatilities on Bunzl PLC 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 Bunzl PLC with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl PLC and New Residential.
Diversification Opportunities for Bunzl PLC and New Residential
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bunzl and New is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl PLC 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 Bunzl PLC 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 Bunzl PLC 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 Bunzl PLC i.e., Bunzl PLC and New Residential go up and down completely randomly.
Pair Corralation between Bunzl PLC and New Residential
Assuming the 90 days trading horizon Bunzl PLC is expected to generate 1.09 times less return on investment than New Residential. But when comparing it to its historical volatility, Bunzl PLC is 1.31 times less risky than New Residential. It trades about 0.07 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 868.00 in New Residential Investment on September 12, 2024 and sell it today you would earn a total of 252.00 from holding New Residential Investment or generate 29.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.44% |
| Values | Daily Returns |
Bunzl PLC vs. New Residential Investment
Performance |
| Timeline |
| Bunzl PLC |
| New Residential Inve |
Bunzl PLC and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl PLC and New Residential
The main advantage of trading using opposite Bunzl PLC and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl PLC 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.| Bunzl PLC vs. New Residential Investment | Bunzl PLC vs. SBM Offshore NV | Bunzl PLC vs. Kinnevik Investment AB | Bunzl PLC vs. The Mercantile Investment |
| New Residential vs. Morgan Advanced Materials | New Residential vs. Gear4music Plc | New Residential vs. JD Sports Fashion | New Residential vs. Science in Sport |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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