Correlation Between Annaly Capital and Empire State
Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Empire State 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 Empire State 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 Empire State Realty, you can compare the effects of market volatilities on Annaly Capital and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Empire State.
Diversification Opportunities for Annaly Capital and Empire State
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Annaly and Empire is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Annaly Capital i.e., Annaly Capital and Empire State go up and down completely randomly.
Pair Corralation between Annaly Capital and Empire State
Considering the 90-day investment horizon Annaly Capital Management is expected to generate 0.63 times more return on investment than Empire State. However, Annaly Capital Management is 1.59 times less risky than Empire State. It trades about -0.21 of its potential returns per unit of risk. Empire State Realty is currently generating about -0.17 per unit of risk. If you would invest 1,920 in Annaly Capital Management on January 20, 2024 and sell it today you would lose (121.00) from holding Annaly Capital Management or give up 6.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Annaly Capital Management vs. Empire State Realty
Performance |
| Timeline |
| Annaly Capital Management |
| Empire State Realty |
Annaly Capital and Empire State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Annaly Capital and Empire State
The main advantage of trading using opposite Annaly Capital and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.The idea behind Annaly Capital Management and Empire State Realty 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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