Correlation Between Intermediate Capital and New Residential
Can any of the company-specific risk be diversified away by investing in both Intermediate Capital 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 Intermediate Capital and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Capital Group and New Residential Investment, you can compare the effects of market volatilities on Intermediate Capital 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 Intermediate Capital with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and New Residential.
Diversification Opportunities for Intermediate Capital and New Residential
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intermediate and New is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group 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 Intermediate Capital 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 Intermediate Capital Group 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 Intermediate Capital i.e., Intermediate Capital and New Residential go up and down completely randomly.
Pair Corralation between Intermediate Capital and New Residential
Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 1.4 times more return on investment than New Residential. However, Intermediate Capital is 1.4 times more volatile than New Residential Investment. It trades about 0.13 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.07 per unit of risk. If you would invest 210,256 in Intermediate Capital Group on October 26, 2024 and sell it today you would earn a total of 21,344 from holding Intermediate Capital Group or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Intermediate Capital Group vs. New Residential Investment
Performance |
| Timeline |
| Intermediate Capital |
| New Residential Inve |
Intermediate Capital and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Capital and New Residential
The main advantage of trading using opposite Intermediate Capital and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital 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.| Intermediate Capital vs. SupplyMe Capital PLC | Intermediate Capital vs. Premier African Minerals | Intermediate Capital vs. SANTANDER UK 8 | Intermediate Capital vs. Tower Resources plc |
| New Residential vs. Berkshire Hathaway | New Residential vs. Samsung Electronics Co | New Residential vs. Samsung Electronics Co | New Residential vs. Chocoladefabriken Lindt Spruengli |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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