Correlation Between Annaly Capital and Armour Residential

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Armour Residential 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 Armour Residential 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 Armour Residential R, you can compare the effects of market volatilities on Annaly Capital and Armour Residential 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 Armour Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Armour Residential.

Diversification Opportunities for Annaly Capital and Armour Residential

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Annaly and Armour is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Armour Residential R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armour Residential 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 Armour Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armour Residential has no effect on the direction of Annaly Capital i.e., Annaly Capital and Armour Residential go up and down completely randomly.

Pair Corralation between Annaly Capital and Armour Residential

Considering the 90-day investment horizon Annaly Capital Management is expected to generate 1.17 times more return on investment than Armour Residential. However, Annaly Capital is 1.17 times more volatile than Armour Residential R. It trades about 0.27 of its potential returns per unit of risk. Armour Residential R is currently generating about 0.23 per unit of risk. If you would invest  1,845  in Annaly Capital Management on August 29, 2022 and sell it today you would earn a total of  320.00  from holding Annaly Capital Management or generate 17.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Annaly Capital Management  vs.  Armour Residential R

 Performance (%) 
       Timeline  
Annaly Capital Management 
Annaly Performance
0 of 100
Over the last 90 days Annaly Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Annaly Price Channel

Armour Residential 
Armour Performance
0 of 100
Over the last 90 days Armour Residential R has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Armour Price Channel

Annaly Capital and Armour Residential Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Annaly Capital and Armour Residential

The main advantage of trading using opposite Annaly Capital and Armour Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Armour Residential 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 Armour Residential will offset losses from the drop in Armour Residential's long position.
Annaly Capital vs. Ally Financial
Annaly Capital vs. Affiliated Managers Group
Annaly Capital vs. Ameriprise Financial Services
Annaly Capital vs. Amtd Idea Group
The idea behind Annaly Capital Management and Armour Residential R 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.
Armour Residential vs. Annaly Capital Management
Armour Residential vs. Agnc Investment Corp
Armour Residential vs. Addentax Group Corp
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go