Correlation Between Compagnie Financière and New Residential
Can any of the company-specific risk be diversified away by investing in both Compagnie Financière 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 Compagnie Financière and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and New Residential Investment, you can compare the effects of market volatilities on Compagnie Financière 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 Compagnie Financière with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financière and New Residential.
Diversification Opportunities for Compagnie Financière and New Residential
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and New is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont 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 Compagnie Financière 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 Compagnie Financire Richemont 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 Compagnie Financière i.e., Compagnie Financière and New Residential go up and down completely randomly.
Pair Corralation between Compagnie Financière and New Residential
Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 1.46 times more return on investment than New Residential. However, Compagnie Financière is 1.46 times more volatile than New Residential Investment. It trades about 0.03 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.02 per unit of risk. If you would invest 1,480 in Compagnie Financire Richemont on October 16, 2024 and sell it today you would earn a total of 10.00 from holding Compagnie Financire Richemont or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Financire Richemont vs. New Residential Investment
Performance |
| Timeline |
| Compagnie Financière |
| New Residential Inve |
Compagnie Financière and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financière and New Residential
The main advantage of trading using opposite Compagnie Financière and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financière 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.| Compagnie Financière vs. New Residential Investment | Compagnie Financière vs. EAT WELL INVESTMENT | Compagnie Financière vs. SAN MIGUEL BREWERY | Compagnie Financière vs. WisdomTree Investments |
| New Residential vs. USWE SPORTS AB | New Residential vs. SPORT LISBOA E | New Residential vs. Transport International Holdings | New Residential vs. Align Technology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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