Correlation Between Annaly Capital and Metalurgica Gerdau

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

Diversification Opportunities for Annaly Capital and Metalurgica Gerdau

0.36

Correlation Coefficient

Annaly Capital  Metalurgica Gerdau

Weak diversification

The 3 months correlation between Annaly and Metalurgica is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Annaly Capital i.e., Annaly Capital and Metalurgica Gerdau go up and down completely randomly.

Pair Corralation between Annaly Capital and Metalurgica Gerdau

Assuming the 90 days trading horizon Annaly Capital Management, is expected to generate 0.68 times more return on investment than Metalurgica Gerdau. However, Annaly Capital Management, is 1.48 times less risky than Metalurgica Gerdau. It trades about 0.14 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about -0.05 per unit of risk. If you would invest  10,753  in Annaly Capital Management, on October 6, 2024 and sell it today you would earn a total of  779.00  from holding Annaly Capital Management, or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.47%
Values	Daily Returns

Annaly Capital Management,  vs.  Metalurgica Gerdau SA

Annaly Capital Manag

Risk-Adjusted Performance

10 of 100

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 sustained solid returns over the last few months and may actually be approaching a breakup point.

Metalurgica Gerdau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalurgica Gerdau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Annaly Capital and Metalurgica Gerdau

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

The idea behind Annaly Capital Management, and Metalurgica Gerdau SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .