Correlation Between Annaly Capital and Apartment Investment

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

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

Diversification Opportunities for Annaly Capital and Apartment Investment

-0.05

Correlation Coefficient

Annaly Capital  Apartment Investment

Good diversification

The 3 months correlation between Annaly and Apartment is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and Annaly Capital 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 Annaly Capital Management, are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of Annaly Capital i.e., Annaly Capital and Apartment Investment go up and down completely randomly.

Pair Corralation between Annaly Capital and Apartment Investment

Assuming the 90 days trading horizon Annaly Capital Management, is expected to generate 0.34 times more return on investment than Apartment Investment. However, Annaly Capital Management, is 2.93 times less risky than Apartment Investment. It trades about 0.1 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.03 per unit of risk. If you would invest  11,327  in Annaly Capital Management, on December 26, 2024 and sell it today you would earn a total of  848.00  from holding Annaly Capital Management, or generate 7.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Annaly Capital Management,  vs.  Apartment Investment and

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 7 (%) 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.

Apartment Investment and

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Annaly Capital and Apartment Investment

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

The idea behind Annaly Capital Management, and Apartment Investment and 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.