Correlation Between Annaly Capital and METISA Metalrgica

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

Diversification Opportunities for Annaly Capital and METISA Metalrgica

0.04

Correlation Coefficient

Annaly Capital  METISA Metalrgica

Significant diversification

The 3 months correlation between Annaly and METISA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Annaly Capital i.e., Annaly Capital and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Annaly Capital and METISA Metalrgica

Assuming the 90 days trading horizon Annaly Capital Management, is expected to under-perform the METISA Metalrgica. But the stock apears to be less risky and, when comparing its historical volatility, Annaly Capital Management, is 1.56 times less risky than METISA Metalrgica. The stock trades about -0.18 of its potential returns per unit of risk. The METISA Metalrgica Timboense is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,540  in METISA Metalrgica Timboense on October 11, 2024 and sell it today you would earn a total of  304.00  from holding METISA Metalrgica Timboense or generate 8.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Annaly Capital Management,  vs.  METISA Metalrgica Timboense

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.

METISA Metalrgica

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Annaly Capital and METISA Metalrgica

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

The idea behind Annaly Capital Management, and METISA Metalrgica Timboense 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.