Correlation Between Newmark and IRSA Inversiones

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

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

Diversification Opportunities for Newmark and IRSA Inversiones

-0.25

Correlation Coefficient

Newmark  IRSA Inversiones

Very good diversification

The 3 months correlation between Newmark and IRSA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Newmark Group and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y and Newmark 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 Newmark Group are associated (or correlated) with IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of Newmark i.e., Newmark and IRSA Inversiones go up and down completely randomly.

Pair Corralation between Newmark and IRSA Inversiones

Given the investment horizon of 90 days Newmark Group is expected to under-perform the IRSA Inversiones. But the stock apears to be less risky and, when comparing its historical volatility, Newmark Group is 1.45 times less risky than IRSA Inversiones. The stock trades about -0.15 of its potential returns per unit of risk. The IRSA Inversiones Y is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  923.00  in IRSA Inversiones Y on February 3, 2024 and sell it today you would earn a total of  61.00  from holding IRSA Inversiones Y or generate 6.61% return on investment over 90 days.

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

Newmark Group  vs.  IRSA Inversiones Y

Newmark Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Newmark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

IRSA Inversiones Y

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IRSA Inversiones Y are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IRSA Inversiones unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmark and IRSA Inversiones

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

The idea behind Newmark Group and IRSA Inversiones Y 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 Global Correlations module to find global opportunities by holding instruments from different markets.