diversifiable risk of combining Annaly Capital and 00108WAF7 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 AEP TEX INC, you can compare the effects of market volatilities on Annaly Capital and 00108WAF7 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 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and 00108WAF7.
Diversification Opportunities for Annaly Capital and 00108WAF7
Pair Corralation between Annaly Capital and 00108WAF7
Annaly Capital Management vs. AEP TEX INC 3.8% 01Oct2047
Annaly Capital and 00108WAF7 Volatility Contrast
Pair Trading with Annaly Capital and 00108WAF7The main advantage of trading using opposite Annaly Capital and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position. The idea behind Annaly Capital Management and AEP TEX INC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.