Correlation Between Annaly Capital and Bayview Acquisition

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

Diversification Opportunities for Annaly Capital and Bayview Acquisition

AnnalyBayviewDiversified AwayAnnalyBayviewDiversified Away100%
0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Annaly and Bayview is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition Corp 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 Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of Annaly Capital i.e., Annaly Capital and Bayview Acquisition go up and down completely randomly.

Pair Corralation between Annaly Capital and Bayview Acquisition

Assuming the 90 days trading horizon Annaly Capital Management is expected to generate 0.51 times more return on investment than Bayview Acquisition. However, Annaly Capital Management is 1.96 times less risky than Bayview Acquisition. It trades about 0.09 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest  1,993  in Annaly Capital Management on September 14, 2024 and sell it today you would earn a total of  523.00  from holding Annaly Capital Management or generate 26.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy51.01%
ValuesDaily Returns

Annaly Capital Management  vs.  Bayview Acquisition Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 01234
JavaScript chart by amCharts 3.21.15NLY-PF BAYAU
       Timeline  
Annaly Capital Management 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Annaly Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec24.724.824.92525.125.225.325.425.5
Bayview Acquisition Corp 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bayview Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.510.610.710.810.91111.1

Annaly Capital and Bayview Acquisition Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.94-0.66-0.38-0.10.0042250.140.420.70.98 1234
JavaScript chart by amCharts 3.21.15NLY-PF BAYAU
       Returns  

Pair Trading with Annaly Capital and Bayview Acquisition

The main advantage of trading using opposite Annaly Capital and Bayview Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Bayview Acquisition 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 Bayview Acquisition will offset losses from the drop in Bayview Acquisition's long position.
The idea behind Annaly Capital Management and Bayview Acquisition Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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