Correlation Between Annaly Capital and Cemepe Investimentos

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

Diversification Opportunities for Annaly Capital and Cemepe Investimentos

0.13

Correlation Coefficient

Annaly Capital  Cemepe Investimentos

Average diversification

The 3 months correlation between Annaly and Cemepe is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and Cemepe Investimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemepe Investimentos 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 Cemepe Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemepe Investimentos has no effect on the direction of Annaly Capital i.e., Annaly Capital and Cemepe Investimentos go up and down completely randomly.

Pair Corralation between Annaly Capital and Cemepe Investimentos

Assuming the 90 days trading horizon Annaly Capital Management, is expected to under-perform the Cemepe Investimentos. But the stock apears to be less risky and, when comparing its historical volatility, Annaly Capital Management, is 1.7 times less risky than Cemepe Investimentos. The stock trades about -0.2 of its potential returns per unit of risk. The Cemepe Investimentos SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Cemepe Investimentos SA on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Cemepe Investimentos SA or generate 10.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Annaly Capital Management,  vs.  Cemepe Investimentos SA

Annaly Capital Manag

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 5 (%) 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 February 2025.

Cemepe Investimentos

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cemepe Investimentos SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cemepe Investimentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Annaly Capital and Cemepe Investimentos

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

The idea behind Annaly Capital Management, and Cemepe Investimentos 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 Commodity Directory module to find actively traded commodities issued by global exchanges.