Correlation Between New Residential and Covivio SA

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

Diversification Opportunities for New Residential and Covivio SA

0.0

Correlation Coefficient

New Residential  Covivio SA

Pay attention - limited upside

The 3 months correlation between New and Covivio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Covivio SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio SA 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 Covivio SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio SA has no effect on the direction of New Residential i.e., New Residential and Covivio SA go up and down completely randomly.

Pair Corralation between New Residential and Covivio SA

If you would invest  1,030  in New Residential Investment on October 9, 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	Flat
Strength	Insignificant
Accuracy	6.25%
Values	Daily Returns

New Residential Investment  vs.  Covivio SA

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 fragile basic indicators, New Residential reported solid returns over the last few months and may actually be approaching a breakup point.

Covivio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covivio SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Covivio SA 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 Covivio SA

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

The idea behind New Residential Investment and Covivio SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.