Correlation Between New Residential and Ion Beam

Can any of the company-specific risk be diversified away by investing in both New Residential and Ion Beam 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 New Residential and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Residential Investment and Ion Beam Applications, you can compare the effects of market volatilities on New Residential and Ion Beam 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 New Residential with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Ion Beam.

Diversification Opportunities for New Residential and Ion Beam

-0.11

Correlation Coefficient

New Residential  Ion Beam

Good diversification

The 3 months correlation between New and Ion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and New Residential 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 New Residential Investment are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of New Residential i.e., New Residential and Ion Beam go up and down completely randomly.

Pair Corralation between New Residential and Ion Beam

Assuming the 90 days trading horizon New Residential Investment is expected to under-perform the Ion Beam. But the stock apears to be less risky and, when comparing its historical volatility, New Residential Investment is 2.51 times less risky than Ion Beam. The stock trades about 0.0 of its potential returns per unit of risk. The Ion Beam Applications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,241  in Ion Beam Applications on September 12, 2024 and sell it today you would earn a total of  121.00  from holding Ion Beam Applications or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

New Residential Investment  vs.  Ion Beam Applications

New Residential Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Residential Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, New Residential is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ion Beam Applications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ion Beam Applications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ion Beam may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with New Residential and Ion Beam

The main advantage of trading using opposite New Residential and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.

The idea behind New Residential Investment and Ion Beam Applications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.