Correlation Between Bread Financial and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Annaly Capital 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 Bread Financial and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Annaly Capital Management,, you can compare the effects of market volatilities on Bread Financial and Annaly Capital 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 Bread Financial with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Annaly Capital.
Diversification Opportunities for Bread Financial and Annaly Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bread and Annaly is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Bread Financial i.e., Bread Financial and Annaly Capital go up and down completely randomly.
Pair Corralation between Bread Financial and Annaly Capital
Assuming the 90 days trading horizon Bread Financial is expected to generate 2.73 times less return on investment than Annaly Capital. In addition to that, Bread Financial is 2.46 times more volatile than Annaly Capital Management,. It trades about 0.03 of its total potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.18 per unit of volatility. If you would invest 11,308 in Annaly Capital Management, on November 3, 2024 and sell it today you would earn a total of 574.00 from holding Annaly Capital Management, or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bread Financial Holdings vs. Annaly Capital Management,
Performance |
| Timeline |
| Bread Financial Holdings |
| Annaly Capital Manag |
Bread Financial and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Annaly Capital
The main advantage of trading using opposite Bread Financial and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Bread Financial vs. Academy Sports and | Bread Financial vs. STAG Industrial, | Bread Financial vs. Tyson Foods | Bread Financial vs. Monster Beverage |
| Annaly Capital vs. Academy Sports and | Annaly Capital vs. Hormel Foods | Annaly Capital vs. United Natural Foods, | Annaly Capital vs. Charter Communications |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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