Correlation Between CDL INVESTMENT and New Residential
Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDL INVESTMENT and New Residential Investment, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and New Residential.
Diversification Opportunities for CDL INVESTMENT and New Residential
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CDL and New is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and New Residential go up and down completely randomly.
Pair Corralation between CDL INVESTMENT and New Residential
Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 3.15 times less return on investment than New Residential. In addition to that, CDL INVESTMENT is 1.93 times more volatile than New Residential Investment. It trades about 0.02 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.12 per unit of volatility. If you would invest 615.00 in New Residential Investment on August 29, 2024 and sell it today you would earn a total of 437.00 from holding New Residential Investment or generate 71.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDL INVESTMENT vs. New Residential Investment
Performance |
| Timeline |
| CDL INVESTMENT |
| New Residential Inve |
CDL INVESTMENT and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDL INVESTMENT and New Residential
The main advantage of trading using opposite CDL INVESTMENT and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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.| CDL INVESTMENT vs. Sabra Health Care | CDL INVESTMENT vs. Zijin Mining Group | CDL INVESTMENT vs. CVS Health | CDL INVESTMENT vs. EPSILON HEALTHCARE LTD |
| New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX | New Residential vs. Lyxor 1 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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