Correlation Between Annaly Capital and Booking Holdings

Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Booking Holdings 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 Booking Holdings 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 Booking Holdings, you can compare the effects of market volatilities on Annaly Capital and Booking Holdings 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 Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Booking Holdings.

Diversification Opportunities for Annaly Capital and Booking Holdings

-0.5

Correlation Coefficient

Annaly Capital  Booking Holdings

Very good diversification

The 3 months correlation between Annaly and Booking is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Annaly Capital i.e., Annaly Capital and Booking Holdings go up and down completely randomly.

Pair Corralation between Annaly Capital and Booking Holdings

Assuming the 90 days trading horizon Annaly Capital Management, is expected to generate 0.6 times more return on investment than Booking Holdings. However, Annaly Capital Management, is 1.67 times less risky than Booking Holdings. It trades about 0.13 of its potential returns per unit of risk. Booking Holdings is currently generating about -0.14 per unit of risk. If you would invest  11,327  in Annaly Capital Management, on December 24, 2024 and sell it today you would earn a total of  1,105  from holding Annaly Capital Management, or generate 9.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Annaly Capital Management,  vs.  Booking Holdings

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 10 (%) 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.

Booking Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Booking Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Annaly Capital and Booking Holdings

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

The idea behind Annaly Capital Management, and Booking Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.