Correlation Between New Residential and Sartorius Stedim

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

Diversification Opportunities for New Residential and Sartorius Stedim

-0.25

Correlation Coefficient

New Residential  Sartorius Stedim

Very good diversification

The 3 months correlation between New and Sartorius is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech 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 Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of New Residential i.e., New Residential and Sartorius Stedim go up and down completely randomly.

Pair Corralation between New Residential and Sartorius Stedim

Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.69 times more return on investment than Sartorius Stedim. However, New Residential Investment is 1.46 times less risky than Sartorius Stedim. It trades about 0.24 of its potential returns per unit of risk. Sartorius Stedim Biotech is currently generating about 0.1 per unit of risk. If you would invest  1,030  in New Residential Investment on October 8, 2024 and sell it today you would earn a total of  50.00  from holding New Residential Investment or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

New Residential Investment  vs.  Sartorius Stedim Biotech

New Residential Inve

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, New Residential reported solid returns over the last few months and may actually be approaching a breakup point.

Sartorius Stedim Biotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sartorius Stedim Biotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sartorius Stedim is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with New Residential and Sartorius Stedim

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

The idea behind New Residential Investment and Sartorius Stedim Biotech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.