Correlation Between National Retail and New Residential
Can any of the company-specific risk be diversified away by investing in both National Retail 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 National Retail and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and New Residential Investment, you can compare the effects of market volatilities on National Retail 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 National Retail with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and New Residential.
Diversification Opportunities for National Retail and New Residential
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and New is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties 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 National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and New Residential go up and down completely randomly.
Pair Corralation between National Retail and New Residential
Assuming the 90 days trading horizon National Retail is expected to generate 33.77 times less return on investment than New Residential. But when comparing it to its historical volatility, National Retail Properties is 1.01 times less risky than New Residential. It trades about 0.0 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 668.00 in New Residential Investment on October 11, 2024 and sell it today you would earn a total of 395.00 from holding New Residential Investment or generate 59.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Retail Properties vs. New Residential Investment
Performance |
| Timeline |
| National Retail Prop |
| New Residential Inve |
National Retail and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and New Residential
The main advantage of trading using opposite National Retail and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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.| National Retail vs. ECHO INVESTMENT ZY | National Retail vs. Cardinal Health | National Retail vs. Phibro Animal Health | National Retail vs. US Physical Therapy |
| New Residential vs. China BlueChemical | New Residential vs. Merit Medical Systems | New Residential vs. ENVVENO MEDICAL DL 00001 | New Residential vs. SCANSOURCE |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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