Correlation Between New York and Sachem Capital

Can any of the company-specific risk be diversified away by investing in both New York and Sachem 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 New York and Sachem Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New York Mortgage and Sachem Capital Corp, you can compare the effects of market volatilities on New York and Sachem 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 New York with a short position of Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Sachem Capital.

Diversification Opportunities for New York and Sachem Capital

-0.55

Correlation Coefficient

New York  Sachem Capital

Excellent diversification

The 3 months correlation between New and Sachem is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp and New York 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 New York Mortgage are associated (or correlated) with Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of New York i.e., New York and Sachem Capital go up and down completely randomly.

Pair Corralation between New York and Sachem Capital

Assuming the 90 days horizon New York Mortgage is expected to generate 0.23 times more return on investment than Sachem Capital. However, New York Mortgage is 4.27 times less risky than Sachem Capital. It trades about 0.15 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about -0.1 per unit of risk. If you would invest  2,297  in New York Mortgage on October 10, 2024 and sell it today you would earn a total of  199.00  from holding New York Mortgage or generate 8.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

New York Mortgage  vs.  Sachem Capital Corp

New York Mortgage

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New York Mortgage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, New York is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with New York and Sachem Capital

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

The idea behind New York Mortgage and Sachem Capital 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.