Correlation Between Granite Point and New York
Can any of the company-specific risk be diversified away by investing in both Granite Point and New York 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 Granite Point and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Point Mortgage and New York Mortgage, you can compare the effects of market volatilities on Granite Point and New York 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 Granite Point with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Point and New York.
Diversification Opportunities for Granite Point and New York
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Granite and New is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage and Granite Point 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 Granite Point Mortgage are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Granite Point i.e., Granite Point and New York go up and down completely randomly.
Pair Corralation between Granite Point and New York
Assuming the 90 days trading horizon Granite Point is expected to generate 2.21 times less return on investment than New York. In addition to that, Granite Point is 1.03 times more volatile than New York Mortgage. It trades about 0.04 of its total potential returns per unit of risk. New York Mortgage is currently generating about 0.09 per unit of volatility. If you would invest 1,506 in New York Mortgage on August 30, 2024 and sell it today you would earn a total of 776.00 from holding New York Mortgage or generate 51.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Point Mortgage vs. New York Mortgage
Performance |
| Timeline |
| Granite Point Mortgage |
| New York Mortgage |
Granite Point and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Point and New York
The main advantage of trading using opposite Granite Point and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Point position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| Granite Point vs. PennyMac Mortgage Investment | Granite Point vs. Rithm Capital Corp | Granite Point vs. ARMOUR Residential REIT | Granite Point vs. MFA Financial |
| New York vs. AG Mortgage Investment | New York vs. AG Mortgage Investment | New York vs. Invesco Mortgage Capital | New York 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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