Correlation Between Capstead Mortgage and AvalonBay Communities
Can any of the company-specific risk be diversified away by investing in both Capstead Mortgage and AvalonBay Communities 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 Capstead Mortgage and AvalonBay Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capstead Mortgage and AvalonBay Communities, you can compare the effects of market volatilities on Capstead Mortgage and AvalonBay Communities 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 Capstead Mortgage with a short position of AvalonBay Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstead Mortgage and AvalonBay Communities.
Diversification Opportunities for Capstead Mortgage and AvalonBay Communities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capstead and AvalonBay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capstead Mortgage and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities and Capstead Mortgage 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 Capstead Mortgage are associated (or correlated) with AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of Capstead Mortgage i.e., Capstead Mortgage and AvalonBay Communities go up and down completely randomly.
Pair Corralation between Capstead Mortgage and AvalonBay Communities
If you would invest 17,897 in AvalonBay Communities on January 26, 2024 and sell it today you would earn a total of 1,237 from holding AvalonBay Communities or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Capstead Mortgage vs. AvalonBay Communities
Performance |
| Timeline |
| Capstead Mortgage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AvalonBay Communities |
Capstead Mortgage and AvalonBay Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstead Mortgage and AvalonBay Communities
The main advantage of trading using opposite Capstead Mortgage and AvalonBay Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstead Mortgage position performs unexpectedly, AvalonBay Communities 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 AvalonBay Communities will offset losses from the drop in AvalonBay Communities' long position.| Capstead Mortgage vs. NETGEAR | Capstead Mortgage vs. Allient | Capstead Mortgage vs. Datadog | Capstead Mortgage vs. Bill Com Holdings |
| AvalonBay Communities vs. Essex Property Trust | AvalonBay Communities vs. UDR Inc | AvalonBay Communities vs. Mid America Apartment Communities | AvalonBay Communities vs. Camden Property Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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