Correlation Between Booking Holdings and Annaly Capital

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

By analyzing existing cross correlation between Booking Holdings and Annaly Capital Management,, you can compare the effects of market volatilities on Booking Holdings 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 Booking Holdings with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Annaly Capital.

Diversification Opportunities for Booking Holdings and Annaly Capital

0.74

Correlation Coefficient

Booking Holdings  Annaly Capital

Poor diversification

The 3 months correlation between Booking and Annaly is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag and Booking Holdings 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 Booking Holdings 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 Manag has no effect on the direction of Booking Holdings i.e., Booking Holdings and Annaly Capital go up and down completely randomly.

Pair Corralation between Booking Holdings and Annaly Capital

Assuming the 90 days trading horizon Booking Holdings is expected to generate 1.18 times more return on investment than Annaly Capital. However, Booking Holdings is 1.18 times more volatile than Annaly Capital Management,. It trades about 0.1 of its potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.03 per unit of risk. If you would invest  6,891  in Booking Holdings on October 11, 2024 and sell it today you would earn a total of  10,035  from holding Booking Holdings or generate 145.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.65%
Values	Daily Returns

Booking Holdings  vs.  Annaly Capital Management,

Booking Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Booking Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Annaly Capital Manag

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Annaly Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Booking Holdings and Annaly Capital

The main advantage of trading using opposite Booking Holdings and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings 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.

The idea behind Booking Holdings and Annaly Capital Management, 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.