Correlation Between Chimera Investment and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Chimera Investment 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 Chimera Investment and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and Annaly Capital Management, you can compare the effects of market volatilities on Chimera Investment 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 Chimera Investment with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Annaly Capital.
Diversification Opportunities for Chimera Investment and Annaly Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chimera and Annaly is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management and Chimera Investment 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 Chimera Investment 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 Management has no effect on the direction of Chimera Investment i.e., Chimera Investment and Annaly Capital go up and down completely randomly.
Pair Corralation between Chimera Investment and Annaly Capital
Assuming the 90 days trading horizon Chimera Investment is expected to generate 1.5 times more return on investment than Annaly Capital. However, Chimera Investment is 1.5 times more volatile than Annaly Capital Management. It trades about 0.14 of its potential returns per unit of risk. Annaly Capital Management is currently generating about 0.12 per unit of risk. If you would invest 1,663 in Chimera Investment on August 31, 2024 and sell it today you would earn a total of 872.00 from holding Chimera Investment or generate 52.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. Annaly Capital Management
Performance |
| Timeline |
| Chimera Investment |
| Annaly Capital Management |
Chimera Investment and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Annaly Capital
The main advantage of trading using opposite Chimera Investment and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment 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.| Chimera Investment vs. AGNC Investment Corp | Chimera Investment vs. Annaly Capital Management | Chimera Investment vs. AGNC Investment Corp | Chimera Investment vs. New York Mortgage |
| Annaly Capital vs. Annaly Capital Management | Annaly Capital vs. Annaly Capital Management | Annaly Capital vs. AGNC Investment Corp | Annaly Capital vs. AGNC Investment 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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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