Correlation Between Newtek Business and DAIKIN INDUSTRUNSPADR

Can any of the company-specific risk be diversified away by investing in both Newtek Business and DAIKIN INDUSTRUNSPADR 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 Newtek Business and DAIKIN INDUSTRUNSPADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newtek Business Services and DAIKIN INDUSTRUNSPADR, you can compare the effects of market volatilities on Newtek Business and DAIKIN INDUSTRUNSPADR 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 Newtek Business with a short position of DAIKIN INDUSTRUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newtek Business and DAIKIN INDUSTRUNSPADR.

Diversification Opportunities for Newtek Business and DAIKIN INDUSTRUNSPADR

-0.44

Correlation Coefficient

Newtek Business  DAIKIN INDUSTRUNSPADR

Very good diversification

The 3 months correlation between Newtek and DAIKIN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services and DAIKIN INDUSTRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIKIN INDUSTRUNSPADR and Newtek Business 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 Newtek Business Services are associated (or correlated) with DAIKIN INDUSTRUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIKIN INDUSTRUNSPADR has no effect on the direction of Newtek Business i.e., Newtek Business and DAIKIN INDUSTRUNSPADR go up and down completely randomly.

Pair Corralation between Newtek Business and DAIKIN INDUSTRUNSPADR

Assuming the 90 days trading horizon Newtek Business Services is expected to generate 0.94 times more return on investment than DAIKIN INDUSTRUNSPADR. However, Newtek Business Services is 1.07 times less risky than DAIKIN INDUSTRUNSPADR. It trades about 0.01 of its potential returns per unit of risk. DAIKIN INDUSTRUNSPADR is currently generating about 0.0 per unit of risk. If you would invest  1,372  in Newtek Business Services on September 26, 2024 and sell it today you would lose (152.00) from holding Newtek Business Services or give up 11.08% of portfolio value over 90 days.

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

Newtek Business Services  vs.  DAIKIN INDUSTRUNSPADR

Newtek Business Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business reported solid returns over the last few months and may actually be approaching a breakup point.

DAIKIN INDUSTRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DAIKIN INDUSTRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Newtek Business and DAIKIN INDUSTRUNSPADR

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

The idea behind Newtek Business Services and DAIKIN INDUSTRUNSPADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.