Correlation Between ARMOUR Residential and Capstead Mortgage
Can any of the company-specific risk be diversified away by investing in both ARMOUR Residential and Capstead Mortgage 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 ARMOUR Residential and Capstead Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARMOUR Residential REIT and Capstead Mortgage, you can compare the effects of market volatilities on ARMOUR Residential and Capstead Mortgage 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 ARMOUR Residential with a short position of Capstead Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARMOUR Residential and Capstead Mortgage.
Diversification Opportunities for ARMOUR Residential and Capstead Mortgage
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARMOUR and Capstead is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ARMOUR Residential REIT and Capstead Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstead Mortgage and ARMOUR Residential 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 ARMOUR Residential REIT are associated (or correlated) with Capstead Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstead Mortgage has no effect on the direction of ARMOUR Residential i.e., ARMOUR Residential and Capstead Mortgage go up and down completely randomly.
Pair Corralation between ARMOUR Residential and Capstead Mortgage
If you would invest 1,854 in ARMOUR Residential REIT on February 12, 2024 and sell it today you would earn a total of 82.00 from holding ARMOUR Residential REIT or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
ARMOUR Residential REIT vs. Capstead Mortgage
Performance |
| Timeline |
| ARMOUR Residential REIT |
| Capstead Mortgage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ARMOUR Residential and Capstead Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARMOUR Residential and Capstead Mortgage
The main advantage of trading using opposite ARMOUR Residential and Capstead Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARMOUR Residential position performs unexpectedly, Capstead Mortgage 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 Capstead Mortgage will offset losses from the drop in Capstead Mortgage's long position.The idea behind ARMOUR Residential REIT and Capstead Mortgage 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.| Capstead Mortgage vs. Dave Busters Entertainment | Capstead Mortgage vs. Bt Brands | Capstead Mortgage vs. The Wendys Co | Capstead Mortgage vs. Diamond Offshore Drilling |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |