Correlation Between NYSE Composite and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Annaly Capital 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 NYSE Composite and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Annaly Capital Management, you can compare the effects of market volatilities on NYSE Composite and Annaly Capital 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 NYSE Composite with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Annaly Capital.
Diversification Opportunities for NYSE Composite and Annaly Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Annaly is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management and NYSE Composite 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 NYSE Composite are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of NYSE Composite i.e., NYSE Composite and Annaly Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Annaly Capital
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Annaly Capital. In addition to that, NYSE Composite is 3.38 times more volatile than Annaly Capital Management. It trades about -0.18 of its total potential returns per unit of risk. Annaly Capital Management is currently generating about -0.07 per unit of volatility. If you would invest 2,533 in Annaly Capital Management on January 29, 2024 and sell it today you would lose (7.00) from holding Annaly Capital Management or give up 0.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Annaly Capital Management
Performance |
Timeline |
NYSE Composite and Annaly Capital Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Annaly Capital Management
Pair trading matchups for Annaly Capital
Pair Trading with NYSE Composite and Annaly Capital
The main advantage of trading using opposite NYSE Composite and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.NYSE Composite vs. Alto Ingredients | NYSE Composite vs. Ryanair Holdings PLC | NYSE Composite vs. Yips Chemical Holdings | NYSE Composite vs. Mesa Air Group |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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