Correlation Between New Residential and Waste Management
Can any of the company-specific risk be diversified away by investing in both New Residential and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on New Residential and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Waste Management.
Diversification Opportunities for New Residential and Waste Management
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Waste is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of New Residential i.e., New Residential and Waste Management go up and down completely randomly.
Pair Corralation between New Residential and Waste Management
Assuming the 90 days trading horizon New Residential Investment is expected to generate 1.39 times more return on investment than Waste Management. However, New Residential is 1.39 times more volatile than Waste Management. It trades about 0.23 of its potential returns per unit of risk. Waste Management is currently generating about 0.27 per unit of risk. If you would invest 1,109 in New Residential Investment on December 2, 2024 and sell it today you would earn a total of 55.00 from holding New Residential Investment or generate 4.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
New Residential Investment vs. Waste Management
Performance |
Timeline |
New Residential Inve |
Waste Management |
New Residential and Waste Management Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Residential and Waste Management
The main advantage of trading using opposite New Residential and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.New Residential vs. PRECISION DRILLING P | New Residential vs. Major Drilling Group | New Residential vs. Cleanaway Waste Management | New Residential vs. Rayonier Advanced Materials |
Waste Management vs. Corsair Gaming | Waste Management vs. ADRIATIC METALS LS 013355 | Waste Management vs. Stag Industrial | Waste Management vs. GRIFFIN MINING LTD |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Stocks Directory Find actively traded stocks across global markets | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Transaction History View history of all your transactions and understand their impact on performance | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |