Correlation Between SAN MIGUEL and New Residential
Can any of the company-specific risk be diversified away by investing in both SAN MIGUEL 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 SAN MIGUEL and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAN MIGUEL BREWERY and New Residential Investment, you can compare the effects of market volatilities on SAN MIGUEL 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 SAN MIGUEL with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAN MIGUEL and New Residential.
Diversification Opportunities for SAN MIGUEL and New Residential
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAN and New is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY 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 SAN MIGUEL 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 SAN MIGUEL BREWERY 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 SAN MIGUEL i.e., SAN MIGUEL and New Residential go up and down completely randomly.
Pair Corralation between SAN MIGUEL and New Residential
Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to generate 1.99 times more return on investment than New Residential. However, SAN MIGUEL is 1.99 times more volatile than New Residential Investment. It trades about 0.2 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.24 per unit of risk. If you would invest 10.00 in SAN MIGUEL BREWERY on October 30, 2024 and sell it today you would earn a total of 1.00 from holding SAN MIGUEL BREWERY or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAN MIGUEL BREWERY vs. New Residential Investment
Performance |
| Timeline |
| SAN MIGUEL BREWERY |
| New Residential Inve |
SAN MIGUEL and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAN MIGUEL and New Residential
The main advantage of trading using opposite SAN MIGUEL and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAN MIGUEL 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.The idea behind SAN MIGUEL BREWERY and New Residential Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| New Residential vs. Sunny Optical Technology | New Residential vs. SEKISUI CHEMICAL | New Residential vs. TIANDE CHEMICAL | New Residential vs. Casio Computer CoLtd |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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