Correlation Between MFA Financial and New York
Can any of the company-specific risk be diversified away by investing in both MFA Financial 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 MFA Financial and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFA Financial and New York Mortgage, you can compare the effects of market volatilities on MFA Financial 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 MFA Financial with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFA Financial and New York.
Diversification Opportunities for MFA Financial and New York
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFA and New is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MFA Financial 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 MFA 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 MFA Financial 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 MFA Financial i.e., MFA Financial and New York go up and down completely randomly.
Pair Corralation between MFA Financial and New York
Assuming the 90 days trading horizon MFA Financial is expected to generate 2.46 times more return on investment than New York. However, MFA Financial is 2.46 times more volatile than New York Mortgage. It trades about 0.19 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.04 per unit of risk. If you would invest 2,390 in MFA Financial on August 30, 2024 and sell it today you would earn a total of 74.00 from holding MFA Financial or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFA Financial vs. New York Mortgage
Performance |
| Timeline |
| MFA Financial |
| New York Mortgage |
MFA Financial and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFA Financial and New York
The main advantage of trading using opposite MFA Financial and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFA Financial 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.| MFA Financial vs. AG Mortgage Investment | MFA Financial vs. AG Mortgage Investment | MFA Financial vs. Invesco Mortgage Capital | MFA Financial vs. Invesco Mortgage Capital |
| 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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