Correlation Between New Residential and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both New Residential and SHIN ETSU 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 SHIN ETSU 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 SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on New Residential and SHIN ETSU 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 SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and SHIN ETSU.
Diversification Opportunities for New Residential and SHIN ETSU
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and SHIN is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of New Residential i.e., New Residential and SHIN ETSU go up and down completely randomly.
Pair Corralation between New Residential and SHIN ETSU
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.52 times more return on investment than SHIN ETSU. However, New Residential Investment is 1.93 times less risky than SHIN ETSU. It trades about 0.11 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about -0.14 per unit of risk. If you would invest 981.00 in New Residential Investment on September 26, 2024 and sell it today you would earn a total of 64.00 from holding New Residential Investment or generate 6.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
New Residential Investment vs. SHIN ETSU CHEMICAL
Performance |
Timeline |
New Residential Inve |
SHIN ETSU CHEMICAL |
New Residential and SHIN ETSU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Residential and SHIN ETSU
The main advantage of trading using opposite New Residential and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, SHIN ETSU 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 SHIN ETSU will offset losses from the drop in SHIN ETSU's long position.New Residential vs. Gentex | New Residential vs. Eaton PLC | New Residential vs. ImagineAR | New Residential vs. Nokia |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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