Correlation Between STORE ELECTRONIC and New Residential
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and New Residential Investment, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and New Residential.
Diversification Opportunities for STORE ELECTRONIC and New Residential
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STORE and New is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and New Residential go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and New Residential
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to under-perform the New Residential. In addition to that, STORE ELECTRONIC is 2.07 times more volatile than New Residential Investment. It trades about -0.04 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.2 per unit of volatility. If you would invest 1,053 in New Residential Investment on November 3, 2024 and sell it today you would earn a total of 54.00 from holding New Residential Investment or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. New Residential Investment
Performance |
| Timeline |
| STORE ELECTRONIC |
| New Residential Inve |
STORE ELECTRONIC and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and New Residential
The main advantage of trading using opposite STORE ELECTRONIC and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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.| STORE ELECTRONIC vs. IMAGIN MEDICAL INC | STORE ELECTRONIC vs. MeVis Medical Solutions | STORE ELECTRONIC vs. Magic Software Enterprises | STORE ELECTRONIC vs. Apollo Medical Holdings |
| New Residential vs. Zijin Mining Group | New Residential vs. Harmony Gold Mining | New Residential vs. Tradegate AG Wertpapierhandelsbank | New Residential vs. Perseus Mining Limited |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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