Correlation Between New Residential and Mineral Financial

Can any of the company-specific risk be diversified away by investing in both New Residential and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on New Residential and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Mineral Financial.

Diversification Opportunities for New Residential and Mineral Financial

0.59

Correlation Coefficient

New Residential  Mineral Financial

Very weak diversification

The 3 months correlation between New and Mineral is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of New Residential i.e., New Residential and Mineral Financial go up and down completely randomly.

Pair Corralation between New Residential and Mineral Financial

Assuming the 90 days trading horizon New Residential is expected to generate 4.01 times less return on investment than Mineral Financial. But when comparing it to its historical volatility, New Residential Investment is 2.42 times less risky than Mineral Financial. It trades about 0.12 of its potential returns per unit of risk. Mineral Financial Investments is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Mineral Financial Investments on October 24, 2024 and sell it today you would earn a total of  450.00  from holding Mineral Financial Investments or generate 40.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

New Residential Investment  vs.  Mineral Financial Investments

New Residential Inve

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mineral Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mineral Financial Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mineral Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Residential and Mineral Financial

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

The idea behind New Residential Investment and Mineral Financial Investments 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.