Correlation Between Annaly Capital and First Real
Can any of the company-specific risk be diversified away by investing in both Annaly Capital and First Real 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 First Real 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 First Real Estate, you can compare the effects of market volatilities on Annaly Capital and First Real 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 First Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and First Real.
Diversification Opportunities for Annaly Capital and First Real
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Annaly and First is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and First Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Real Estate 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 First Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Real Estate has no effect on the direction of Annaly Capital i.e., Annaly Capital and First Real go up and down completely randomly.
Pair Corralation between Annaly Capital and First Real
Considering the 90-day investment horizon Annaly Capital Management is expected to generate 1.22 times more return on investment than First Real. However, Annaly Capital is 1.22 times more volatile than First Real Estate. It trades about -0.08 of its potential returns per unit of risk. First Real Estate is currently generating about -0.24 per unit of risk. If you would invest 1,908 in Annaly Capital Management on January 26, 2024 and sell it today you would lose (50.00) from holding Annaly Capital Management or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Annaly Capital Management vs. First Real Estate
Performance |
| Timeline |
| Annaly Capital Management |
| First Real Estate |
Annaly Capital and First Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Annaly Capital and First Real
The main advantage of trading using opposite Annaly Capital and First Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, First Real 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 First Real will offset losses from the drop in First Real's long position.The idea behind Annaly Capital Management and First Real Estate 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.| First Real vs. Modiv Inc | First Real vs. Presidio Property Trust | First Real vs. Medalist Diversified Reit | First Real vs. Gladstone Commercial |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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