Correlation Between Annaly Capital and Annaly Capital

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

Diversification Opportunities for Annaly Capital and Annaly Capital

0.88

Correlation Coefficient

Annaly Capital  Annaly Capital

Very poor diversification

The 3 months correlation between Annaly and Annaly is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Annaly Capital i.e., Annaly Capital and Annaly Capital go up and down completely randomly.

Pair Corralation between Annaly Capital and Annaly Capital

Assuming the 90 days trading horizon Annaly Capital is expected to generate 1.12 times less return on investment than Annaly Capital. But when comparing it to its historical volatility, Annaly Capital Management is 1.32 times less risky than Annaly Capital. It trades about 0.1 of its potential returns per unit of risk. Annaly Capital Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,931  in Annaly Capital Management on September 28, 2024 and sell it today you would earn a total of  586.00  from holding Annaly Capital Management or generate 30.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Annaly Capital Management  vs.  Annaly Capital Management

Annaly Capital Management

Risk-Adjusted Performance

14 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management are ranked lower than 14 (%) 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.

Annaly Capital Management

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management are ranked lower than 12 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Annaly Capital and Annaly Capital

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

The idea behind Annaly Capital Management and Annaly Capital Management 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.