Correlation Between Annaly Capital and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Annaly Capital and Hormel Foods 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 Annaly Capital and Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Annaly Capital Management, and Hormel Foods, you can compare the effects of market volatilities on Annaly Capital and Hormel Foods 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 Annaly Capital with a short position of Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and Hormel Foods.
Diversification Opportunities for Annaly Capital and Hormel Foods
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Annaly and Hormel is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods and Annaly Capital 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 Annaly Capital Management, are associated (or correlated) with Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Annaly Capital i.e., Annaly Capital and Hormel Foods go up and down completely randomly.
Pair Corralation between Annaly Capital and Hormel Foods
Assuming the 90 days trading horizon Annaly Capital Management, is expected to generate 1.0 times more return on investment than Hormel Foods. However, Annaly Capital Management, is 1.0 times less risky than Hormel Foods. It trades about -0.16 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.18 per unit of risk. If you would invest 11,772 in Annaly Capital Management, on October 11, 2024 and sell it today you would lose (433.00) from holding Annaly Capital Management, or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.47% |
| Values | Daily Returns |
Annaly Capital Management, vs. Hormel Foods
Performance |
| Timeline |
| Annaly Capital Manag |
| Hormel Foods |
Annaly Capital and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Annaly Capital and Hormel Foods
The main advantage of trading using opposite Annaly Capital and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| Annaly Capital vs. Verizon Communications | Annaly Capital vs. Unity Software | Annaly Capital vs. T Mobile | Annaly Capital vs. Metalurgica Gerdau SA |
| Hormel Foods vs. Nordon Indstrias Metalrgicas | Hormel Foods vs. Align Technology | Hormel Foods vs. Zebra Technologies | Hormel Foods vs. GP Investments |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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