Correlation Between GP Investments and Annaly Capital

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

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

Diversification Opportunities for GP Investments and Annaly Capital

-0.1

Correlation Coefficient

GP Investments  Annaly Capital

Good diversification

The 3 months correlation between GPIV33 and Annaly is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments 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 GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Annaly Capital go up and down completely randomly.

Pair Corralation between GP Investments and Annaly Capital

Assuming the 90 days trading horizon GP Investments is expected to generate 1.76 times more return on investment than Annaly Capital. However, GP Investments is 1.76 times more volatile than Annaly Capital Management,. It trades about 0.04 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  274.00  in GP Investments on October 11, 2024 and sell it today you would earn a total of  121.00  from holding GP Investments or generate 44.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.45%
Values	Daily Returns

GP Investments  vs.  Annaly Capital Management,

GP Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Annaly Capital Manag

Risk-Adjusted Performance

4 of 100

Modest

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 GP Investments and Annaly Capital

The main advantage of trading using opposite GP Investments and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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 GP Investments 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.