Correlation Between Spirent Communications and New Residential
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and New Residential Investment, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and New Residential.
Diversification Opportunities for Spirent Communications and New Residential
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and New is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and New Residential go up and down completely randomly.
Pair Corralation between Spirent Communications and New Residential
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 1.31 times more return on investment than New Residential. However, Spirent Communications is 1.31 times more volatile than New Residential Investment. It trades about 0.22 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 17,030 in Spirent Communications plc on September 14, 2024 and sell it today you would earn a total of 900.00 from holding Spirent Communications plc or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. New Residential Investment
Performance |
| Timeline |
| Spirent Communications |
| New Residential Inve |
Spirent Communications and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and New Residential
The main advantage of trading using opposite Spirent Communications and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. National Atomic Co | Spirent Communications vs. Flutter Entertainment PLC | Spirent Communications vs. Camellia Plc | Spirent Communications vs. Marwyn Value Investors |
| New Residential vs. Zoom Video Communications | New Residential vs. Spirent Communications plc | New Residential vs. Aeorema Communications Plc | New Residential vs. Alior Bank SA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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