Correlation Between Miton UK and New Residential
Can any of the company-specific risk be diversified away by investing in both Miton UK 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 Miton UK and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miton UK MicroCap and New Residential Investment, you can compare the effects of market volatilities on Miton UK 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 Miton UK with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miton UK and New Residential.
Diversification Opportunities for Miton UK and New Residential
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Miton and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap 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 Miton UK 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 Miton UK MicroCap 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 Miton UK i.e., Miton UK and New Residential go up and down completely randomly.
Pair Corralation between Miton UK and New Residential
Assuming the 90 days trading horizon Miton UK MicroCap is expected to under-perform the New Residential. But the stock apears to be less risky and, when comparing its historical volatility, Miton UK MicroCap is 1.31 times less risky than New Residential. The stock trades about -0.01 of its potential returns per unit of risk. The New Residential Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 892.00 in New Residential Investment on September 1, 2024 and sell it today you would earn a total of 238.00 from holding New Residential Investment or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Miton UK MicroCap vs. New Residential Investment
Performance |
| Timeline |
| Miton UK MicroCap |
| New Residential Inve |
Miton UK and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miton UK and New Residential
The main advantage of trading using opposite Miton UK and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miton UK 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.| Miton UK vs. Toyota Motor Corp | Miton UK vs. SoftBank Group Corp | Miton UK vs. OTP Bank Nyrt | Miton UK vs. Las Vegas Sands |
| New Residential vs. Uniper SE | New Residential vs. Mulberry Group PLC | New Residential vs. London Security Plc | New Residential vs. Triad Group PLC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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