Correlation Between NewHold Investment and East Resources
Can any of the company-specific risk be diversified away by investing in both NewHold Investment and East Resources 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 NewHold Investment and East Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewHold Investment Corp and East Resources Acquisition, you can compare the effects of market volatilities on NewHold Investment and East Resources 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 NewHold Investment with a short position of East Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewHold Investment and East Resources.
Diversification Opportunities for NewHold Investment and East Resources
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NewHold and East is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NewHold Investment Corp and East Resources Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Resources Acqui and NewHold Investment 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 NewHold Investment Corp are associated (or correlated) with East Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Resources Acqui has no effect on the direction of NewHold Investment i.e., NewHold Investment and East Resources go up and down completely randomly.
Pair Corralation between NewHold Investment and East Resources
If you would invest 28.00 in East Resources Acquisition on September 10, 2024 and sell it today you would earn a total of 0.00 from holding East Resources Acquisition or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NewHold Investment Corp vs. East Resources Acquisition
Performance |
Timeline |
NewHold Investment Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
East Resources Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NewHold Investment and East Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NewHold Investment and East Resources
The main advantage of trading using opposite NewHold Investment and East Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewHold Investment position performs unexpectedly, East Resources 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 East Resources will offset losses from the drop in East Resources' long position.NewHold Investment vs. National Vision Holdings | NewHold Investment vs. Cedar Realty Trust | NewHold Investment vs. Kite Realty Group | NewHold Investment vs. Cardinal Health |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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