Correlation Between NYSE Composite and MFA Financial
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and MFA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and MFA Financial, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and MFA Financial.
Diversification Opportunities for NYSE Composite and MFA Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and MFA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and MFA Financial go up and down completely randomly.
Pair Corralation between NYSE Composite and MFA Financial
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.9 times more return on investment than MFA Financial. However, NYSE Composite is 1.11 times less risky than MFA Financial. It trades about 0.29 of its potential returns per unit of risk. MFA Financial is currently generating about 0.18 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 79,355 from holding NYSE Composite or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. MFA Financial
Performance |
| Timeline |
NYSE Composite and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
MFA Financial
Pair trading matchups for MFA Financial
Pair Trading with NYSE Composite and MFA Financial
The main advantage of trading using opposite NYSE Composite and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| MFA Financial vs. MFA Financial | MFA Financial vs. ARMOUR Residential REIT | MFA Financial vs. Annaly Capital Management | MFA Financial vs. Two Harbors Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |