Correlation Between Mineral Financial and New Residential

Can any of the company-specific risk be diversified away by investing in both Mineral Financial and New Residential 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 Mineral Financial and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mineral Financial Investments and New Residential Investment, you can compare the effects of market volatilities on Mineral Financial and New Residential 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 Mineral Financial with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mineral Financial and New Residential.

Diversification Opportunities for Mineral Financial and New Residential

0.59

Correlation Coefficient

Mineral Financial  New Residential

Very weak diversification

The 3 months correlation between Mineral and New is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Financial Investments and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Mineral Financial 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 Mineral Financial Investments are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Mineral Financial i.e., Mineral Financial and New Residential go up and down completely randomly.

Pair Corralation between Mineral Financial and New Residential

Assuming the 90 days trading horizon Mineral Financial Investments is expected to generate 2.42 times more return on investment than New Residential. However, Mineral Financial is 2.42 times more volatile than New Residential Investment. It trades about 0.19 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.12 per unit of risk. If you would invest  1,100  in Mineral Financial Investments on October 24, 2024 and sell it today you would earn a total of  450.00  from holding Mineral Financial Investments or generate 40.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Mineral Financial Investments  vs.  New Residential Investment

Mineral Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mineral Financial Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mineral Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

New Residential Inve

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mineral Financial and New Residential

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

The idea behind Mineral Financial Investments and New Residential Investment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.