Correlation Between New Residential and Microbot Medical

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

Diversification Opportunities for New Residential and Microbot Medical

0.51

Correlation Coefficient

New Residential  Microbot Medical

Very weak diversification

The 3 months correlation between New and Microbot is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical 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 Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of New Residential i.e., New Residential and Microbot Medical go up and down completely randomly.

Pair Corralation between New Residential and Microbot Medical

Assuming the 90 days trading horizon New Residential Investment is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, New Residential Investment is 3.13 times less risky than Microbot Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Microbot Medical on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Microbot Medical 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

New Residential Investment  vs.  Microbot Medical

New Residential Inve

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Microbot Medical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Residential and Microbot Medical

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

The idea behind New Residential Investment and Microbot Medical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.