Correlation Between New World and Comstock Holding

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

By analyzing existing cross correlation between New World Development and Comstock Holding Companies, you can compare the effects of market volatilities on New World and Comstock Holding 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 World with a short position of Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Comstock Holding.

Diversification Opportunities for New World and Comstock Holding

0.68

Correlation Coefficient

New World  Comstock Holding

Poor diversification

The 3 months correlation between New and Comstock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding New World Development and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com and New World 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 World Development are associated (or correlated) with Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of New World i.e., New World and Comstock Holding go up and down completely randomly.

Pair Corralation between New World and Comstock Holding

Assuming the 90 days horizon New World Development is expected to generate 1.51 times more return on investment than Comstock Holding. However, New World is 1.51 times more volatile than Comstock Holding Companies. It trades about -0.15 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about -0.35 per unit of risk. If you would invest  53.00  in New World Development on August 31, 2024 and sell it today you would lose (12.00) from holding New World Development or give up 22.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

New World Development  vs.  Comstock Holding Companies

New World Development

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New World Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, New World may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Comstock Holding Com

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Holding Companies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Comstock Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New World and Comstock Holding

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

The idea behind New World Development and Comstock Holding Companies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.