Correlation Between Media and New Residential
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and New Residential Investment, you can compare the effects of market volatilities on Media 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 Media with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and New Residential.
Diversification Opportunities for Media and New Residential
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Media and New is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games 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 Media 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 Media and Games 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 Media i.e., Media and New Residential go up and down completely randomly.
Pair Corralation between Media and New Residential
Assuming the 90 days trading horizon Media and Games is expected to generate 3.03 times more return on investment than New Residential. However, Media is 3.03 times more volatile than New Residential Investment. It trades about 0.06 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.08 per unit of risk. If you would invest 175.00 in Media and Games on September 3, 2024 and sell it today you would earn a total of 178.00 from holding Media and Games or generate 101.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. New Residential Investment
Performance |
| Timeline |
| Media and Games |
| New Residential Inve |
Media and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and New Residential
The main advantage of trading using opposite Media and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. Rocket Internet SE | Media vs. Superior Plus Corp | Media vs. NMI Holdings | Media vs. Origin Agritech |
| New Residential vs. Richardson Electronics | New Residential vs. Clean Energy Fuels | New Residential vs. Renesas Electronics | New Residential vs. METHODE ELECTRONICS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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