Correlation Between Newtek Business and Teachers Insurance
Can any of the company-specific risk be diversified away by investing in both Newtek Business and Teachers Insurance 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 Newtek Business and Teachers Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newtek Business Services and Teachers Insurance And, you can compare the effects of market volatilities on Newtek Business and Teachers Insurance 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 Newtek Business with a short position of Teachers Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtek Business and Teachers Insurance.
Diversification Opportunities for Newtek Business and Teachers Insurance
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newtek and Teachers is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services and Teachers Insurance And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teachers Insurance And and Newtek Business 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 Newtek Business Services are associated (or correlated) with Teachers Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teachers Insurance And has no effect on the direction of Newtek Business i.e., Newtek Business and Teachers Insurance go up and down completely randomly.
Pair Corralation between Newtek Business and Teachers Insurance
Assuming the 90 days horizon Newtek Business Services is expected to generate 7.43 times more return on investment than Teachers Insurance. However, Newtek Business is 7.43 times more volatile than Teachers Insurance And. It trades about 0.03 of its potential returns per unit of risk. Teachers Insurance And is currently generating about -0.37 per unit of risk. If you would invest 2,198 in Newtek Business Services on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Newtek Business Services or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Newtek Business Services vs. Teachers Insurance And
Performance |
| Timeline |
| Newtek Business Services |
| Teachers Insurance And |
Newtek Business and Teachers Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newtek Business and Teachers Insurance
The main advantage of trading using opposite Newtek Business and Teachers Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtek Business position performs unexpectedly, Teachers Insurance 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 Teachers Insurance will offset losses from the drop in Teachers Insurance's long position.The idea behind Newtek Business Services and Teachers Insurance And 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.| Teachers Insurance vs. Wasatch Global Opportunities | Teachers Insurance vs. T Rowe Price | Teachers Insurance vs. Us Global Investors | Teachers Insurance vs. Us Global Leaders |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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