Correlation Between New England and Newmark

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

By analyzing existing cross correlation between New England Realty and Newmark Group, you can compare the effects of market volatilities on New England and Newmark 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 England with a short position of Newmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of New England and Newmark.

Diversification Opportunities for New England and Newmark

0.05

Correlation Coefficient

New England  Newmark

Significant diversification

The 3 months correlation between New and Newmark is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding New England Realty and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group and New England 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 England Realty are associated (or correlated) with Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of New England i.e., New England and Newmark go up and down completely randomly.

Pair Corralation between New England and Newmark

Considering the 90-day investment horizon New England Realty is expected to generate 1.0 times more return on investment than Newmark. However, New England Realty is 1.0 times less risky than Newmark. It trades about 0.06 of its potential returns per unit of risk. Newmark Group is currently generating about 0.0 per unit of risk. If you would invest  7,426  in New England Realty on December 27, 2024 and sell it today you would earn a total of  410.00  from holding New England Realty or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

New England Realty  vs.  Newmark Group

New England Realty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New England Realty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, New England may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Newmark Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newmark Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Newmark is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with New England and Newmark

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

The idea behind New England Realty and Newmark Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.