Correlation Between Ford and Annaly Capital

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

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

Diversification Opportunities for Ford and Annaly Capital

-0.06

Correlation Coefficient

Ford  Annaly Capital

Good diversification

The 3 months correlation between Ford and Annaly is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Annaly Capital go up and down completely randomly.

Pair Corralation between Ford and Annaly Capital

Taking into account the 90-day investment horizon Ford is expected to generate 1.68 times less return on investment than Annaly Capital. In addition to that, Ford is 1.48 times more volatile than Annaly Capital Management,. It trades about 0.05 of its total potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.12 per unit of volatility. If you would invest  11,350  in Annaly Capital Management, on December 20, 2024 and sell it today you would earn a total of  1,010  from holding Annaly Capital Management, or generate 8.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ford Motor  vs.  Annaly Capital Management,

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Annaly Capital Manag

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Annaly Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Annaly Capital

The main advantage of trading using opposite Ford and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.