Correlation Between Annaly Capital and Nasdaq

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Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on Annaly Capital and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Nasdaq.

Diversification Opportunities for Annaly Capital and Nasdaq

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Annaly and Nasdaq is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Annaly Capital i.e., Annaly Capital and Nasdaq go up and down completely randomly.

Pair Corralation between Annaly Capital and Nasdaq

Considering the 90-day investment horizon Annaly Capital Management is expected to under-perform the Nasdaq. In addition to that, Annaly Capital is 1.11 times more volatile than Nasdaq Inc. It trades about -0.05 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.05 per unit of volatility. If you would invest  4,104  in Nasdaq Inc on July 4, 2022 and sell it today you would earn a total of  1,564  from holding Nasdaq Inc or generate 38.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Annaly Capital Management  vs.  Nasdaq Inc

 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 conflicting performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Annaly Price Channel

Nasdaq Inc 
Nasdaq Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Nasdaq Price Channel

Annaly Capital and Nasdaq Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Annaly Capital and Nasdaq

The main advantage of trading using opposite Annaly Capital and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.
Annaly Capital vs. Amazon Inc
The idea behind Annaly Capital Management and Nasdaq 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.
Nasdaq vs. Amazon Inc
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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