Correlation Between NewRiver REIT and Cars
Can any of the company-specific risk be diversified away by investing in both NewRiver REIT and Cars 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 NewRiver REIT and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewRiver REIT plc and Cars Inc, you can compare the effects of market volatilities on NewRiver REIT and Cars 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 NewRiver REIT with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewRiver REIT and Cars.
Diversification Opportunities for NewRiver REIT and Cars
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NewRiver and Cars is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NewRiver REIT plc and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and NewRiver REIT 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 NewRiver REIT plc are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of NewRiver REIT i.e., NewRiver REIT and Cars go up and down completely randomly.
Pair Corralation between NewRiver REIT and Cars
Assuming the 90 days trading horizon NewRiver REIT plc is expected to under-perform the Cars. But the stock apears to be less risky and, when comparing its historical volatility, NewRiver REIT plc is 2.52 times less risky than Cars. The stock trades about 0.0 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,720 in Cars Inc on August 27, 2024 and sell it today you would earn a total of 183.00 from holding Cars Inc or generate 10.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 54.05% |
| Values | Daily Returns |
NewRiver REIT plc vs. Cars Inc
Performance |
| Timeline |
| NewRiver REIT plc |
| Cars Inc |
NewRiver REIT and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewRiver REIT and Cars
The main advantage of trading using opposite NewRiver REIT and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewRiver REIT position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| NewRiver REIT vs. Cars Inc | NewRiver REIT vs. Impax Asset Management | NewRiver REIT vs. Supermarket Income REIT | NewRiver REIT vs. JD Sports Fashion |
| Cars vs. Samsung Electronics Co | Cars vs. Samsung Electronics Co | Cars vs. Hyundai Motor | Cars vs. Toyota Motor Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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