Correlation Between INDIKA ENERGY and New Residential
Can any of the company-specific risk be diversified away by investing in both INDIKA ENERGY 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 INDIKA ENERGY and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDIKA ENERGY and New Residential Investment, you can compare the effects of market volatilities on INDIKA ENERGY 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 INDIKA ENERGY with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIKA ENERGY and New Residential.
Diversification Opportunities for INDIKA ENERGY and New Residential
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDIKA and New is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY i.e., INDIKA ENERGY and New Residential go up and down completely randomly.
Pair Corralation between INDIKA ENERGY and New Residential
Assuming the 90 days trading horizon INDIKA ENERGY is expected to generate 3.21 times more return on investment than New Residential. However, INDIKA ENERGY is 3.21 times more volatile than New Residential Investment. It trades about 0.02 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.06 per unit of risk. If you would invest 7.80 in INDIKA ENERGY on September 12, 2024 and sell it today you would earn a total of 0.05 from holding INDIKA ENERGY or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INDIKA ENERGY vs. New Residential Investment
Performance |
| Timeline |
| INDIKA ENERGY |
| New Residential Inve |
INDIKA ENERGY and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDIKA ENERGY and New Residential
The main advantage of trading using opposite INDIKA ENERGY and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY 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.| INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc |
| New Residential vs. PKSHA TECHNOLOGY INC | New Residential vs. FARO Technologies | New Residential vs. CI GAMES SA | New Residential vs. EAST SIDE GAMES |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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