Correlation Between Chimera Investment and MFA Financial
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and MFA Financial 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 MFA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and MFA Financial, you can compare the effects of market volatilities on Chimera Investment and MFA Financial 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 MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and MFA Financial.
Diversification Opportunities for Chimera Investment and MFA Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chimera and MFA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial 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 MFA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFA Financial has no effect on the direction of Chimera Investment i.e., Chimera Investment and MFA Financial go up and down completely randomly.
Pair Corralation between Chimera Investment and MFA Financial
Considering the 90-day investment horizon Chimera Investment is expected to generate 8.87 times less return on investment than MFA Financial. In addition to that, Chimera Investment is 1.27 times more volatile than MFA Financial. It trades about 0.0 of its total potential returns per unit of risk. MFA Financial is currently generating about 0.04 per unit of volatility. If you would invest 837.00 in MFA Financial on August 24, 2024 and sell it today you would earn a total of 256.00 from holding MFA Financial or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. MFA Financial
Performance |
| Timeline |
| Chimera Investment |
| MFA Financial |
Chimera Investment and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and MFA Financial
The main advantage of trading using opposite Chimera Investment and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, MFA Financial 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 MFA Financial will offset losses from the drop in MFA Financial's long position.| Chimera Investment vs. Two Harbors Investments | Chimera Investment vs. MFA Financial | Chimera Investment vs. Invesco Mortgage Capital | Chimera Investment vs. Orchid Island Capital |
| MFA Financial vs. Chimera Investment | MFA Financial vs. ARMOUR Residential REIT | MFA Financial vs. Orchid Island Capital | MFA Financial vs. Invesco Mortgage Capital |
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 CEOs Directory module to screen CEOs from public companies around the world.
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