Correlation Between Metals Exploration and New Residential

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

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

Diversification Opportunities for Metals Exploration and New Residential

-0.27

Correlation Coefficient

Metals Exploration  New Residential

Very good diversification

The 3 months correlation between Metals and New is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc 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 Metals Exploration 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 Metals Exploration Plc 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 Metals Exploration i.e., Metals Exploration and New Residential go up and down completely randomly.

Pair Corralation between Metals Exploration and New Residential

Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 2.66 times more return on investment than New Residential. However, Metals Exploration is 2.66 times more volatile than New Residential Investment. It trades about 0.11 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.08 per unit of risk. If you would invest  485.00  in Metals Exploration Plc on October 7, 2024 and sell it today you would earn a total of  105.00  from holding Metals Exploration Plc or generate 21.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Metals Exploration Plc  vs.  New Residential Investment

Metals Exploration Plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Metals Exploration exhibited solid returns over the last few months and may actually be approaching a breakup point.

New Residential Inve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 6 (%) 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 Metals Exploration and New Residential

The main advantage of trading using opposite Metals Exploration and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration 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 Metals Exploration Plc 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.