Correlation Between GOLD ROAD and New Residential
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and New Residential Investment, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and New Residential.
Diversification Opportunities for GOLD ROAD and New Residential
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GOLD and New is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES 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 GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and New Residential go up and down completely randomly.
Pair Corralation between GOLD ROAD and New Residential
Assuming the 90 days trading horizon GOLD ROAD RES is expected to under-perform the New Residential. In addition to that, GOLD ROAD is 1.66 times more volatile than New Residential Investment. It trades about -0.13 of its total potential returns per unit of risk. New Residential Investment is currently generating about -0.2 per unit of volatility. If you would invest 1,147 in New Residential Investment on December 10, 2024 and sell it today you would lose (59.00) from holding New Residential Investment or give up 5.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. New Residential Investment
Performance |
| Timeline |
| GOLD ROAD RES |
| New Residential Inve |
GOLD ROAD and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and New Residential
The main advantage of trading using opposite GOLD ROAD and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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.| GOLD ROAD vs. Meiko Electronics Co | GOLD ROAD vs. AOI Electronics Co | GOLD ROAD vs. Cars Inc | GOLD ROAD vs. Motorcar Parts of |
| New Residential vs. Axway Software SA | New Residential vs. Kingdee International Software | New Residential vs. Sinopec Shanghai Petrochemical | New Residential vs. Alfa Financial Software |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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