Correlation Between New Residential and AUSTEVOLL SEAFOOD

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

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

Diversification Opportunities for New Residential and AUSTEVOLL SEAFOOD

0.04

Correlation Coefficient

New Residential  AUSTEVOLL SEAFOOD

Significant diversification

The 3 months correlation between New and AUSTEVOLL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD and New Residential 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 Residential Investment are associated (or correlated) with AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of New Residential i.e., New Residential and AUSTEVOLL SEAFOOD go up and down completely randomly.

Pair Corralation between New Residential and AUSTEVOLL SEAFOOD

Assuming the 90 days trading horizon New Residential is expected to generate 1.62 times less return on investment than AUSTEVOLL SEAFOOD. But when comparing it to its historical volatility, New Residential Investment is 1.29 times less risky than AUSTEVOLL SEAFOOD. It trades about 0.06 of its potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  759.00  in AUSTEVOLL SEAFOOD on August 31, 2024 and sell it today you would earn a total of  103.00  from holding AUSTEVOLL SEAFOOD or generate 13.57% return on investment over 90 days.

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

New Residential Investment  vs.  AUSTEVOLL SEAFOOD

New Residential Inve

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, New Residential is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AUSTEVOLL SEAFOOD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AUSTEVOLL SEAFOOD may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with New Residential and AUSTEVOLL SEAFOOD

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

The idea behind New Residential Investment and AUSTEVOLL SEAFOOD 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.