Correlation Between New Residential and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both New Residential and Metalla Royalty 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 Metalla Royalty 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 Metalla Royalty Streaming, you can compare the effects of market volatilities on New Residential and Metalla Royalty 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 Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Metalla Royalty.
Diversification Opportunities for New Residential and Metalla Royalty
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Metalla is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of New Residential i.e., New Residential and Metalla Royalty go up and down completely randomly.
Pair Corralation between New Residential and Metalla Royalty
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.4 times more return on investment than Metalla Royalty. However, New Residential Investment is 2.49 times less risky than Metalla Royalty. It trades about 0.24 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.04 per unit of risk. 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 | Moves Against |
Strength | Weak |
Accuracy | 94.12% |
Values | Daily Returns |
New Residential Investment vs. Metalla Royalty Streaming
Performance |
Timeline |
New Residential Inve |
Metalla Royalty Streaming |
New Residential and Metalla Royalty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Residential and Metalla Royalty
The main advantage of trading using opposite New Residential and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Metalla Royalty 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 Metalla Royalty will offset losses from the drop in Metalla Royalty's long position.New Residential vs. Ryohin Keikaku Co | New Residential vs. Deutsche Telekom AG | New Residential vs. BE Semiconductor Industries | New Residential vs. CRAWFORD A NV |
Metalla Royalty vs. CN MODERN DAIRY | Metalla Royalty vs. Tianjin Capital Environmental | Metalla Royalty vs. Performance Food Group | Metalla Royalty vs. DENTSPLY SIRONA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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