Correlation Between Rheinmetall and New Residential
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and New Residential Investment, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and New Residential.
Diversification Opportunities for Rheinmetall and New Residential
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rheinmetall and New is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG 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 Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and New Residential go up and down completely randomly.
Pair Corralation between Rheinmetall and New Residential
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.32 times more return on investment than New Residential. However, Rheinmetall is 1.32 times more volatile than New Residential Investment. It trades about 0.52 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.21 per unit of risk. If you would invest 61,560 in Rheinmetall AG on October 29, 2024 and sell it today you would earn a total of 11,480 from holding Rheinmetall AG or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. New Residential Investment
Performance |
| Timeline |
| Rheinmetall AG |
| New Residential Inve |
Rheinmetall and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and New Residential
The main advantage of trading using opposite Rheinmetall and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. AEON STORES | Rheinmetall vs. JIAHUA STORES | Rheinmetall vs. BURLINGTON STORES | Rheinmetall vs. Elmos Semiconductor SE |
| New Residential vs. CHINA HUARONG ENERHD 50 | New Residential vs. Huntington Bancshares Incorporated | New Residential vs. NorAm Drilling AS | New Residential vs. Rheinmetall AG |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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