Correlation Between New York and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both New York and ARMOUR Residential 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 New York and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and ARMOUR Residential REIT, you can compare the effects of market volatilities on New York and ARMOUR Residential 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 New York with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and ARMOUR Residential.
Diversification Opportunities for New York and ARMOUR Residential
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and ARMOUR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and ARMOUR Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARMOUR Residential REIT and New York 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 New York Mortgage are associated (or correlated) with ARMOUR Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARMOUR Residential REIT has no effect on the direction of New York i.e., New York and ARMOUR Residential go up and down completely randomly.
Pair Corralation between New York and ARMOUR Residential
Given the investment horizon of 90 days New York Mortgage is expected to under-perform the ARMOUR Residential. In addition to that, New York is 1.17 times more volatile than ARMOUR Residential REIT. It trades about -0.03 of its total potential returns per unit of risk. ARMOUR Residential REIT is currently generating about 0.0 per unit of volatility. If you would invest 2,062 in ARMOUR Residential REIT on August 23, 2024 and sell it today you would lose (192.00) from holding ARMOUR Residential REIT or give up 9.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. ARMOUR Residential REIT
Performance |
| Timeline |
| New York Mortgage |
| ARMOUR Residential REIT |
New York and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and ARMOUR Residential
The main advantage of trading using opposite New York and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, ARMOUR Residential 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 ARMOUR Residential will offset losses from the drop in ARMOUR Residential's long position.| New York vs. Two Harbors Investments | New York vs. ARMOUR Residential REIT | New York vs. Annaly Capital Management | New York vs. AGNC Investment Corp |
| ARMOUR Residential vs. Ellington Financial | ARMOUR Residential vs. Two Harbors Investments | ARMOUR Residential vs. Dynex Capital | ARMOUR Residential vs. Ellington Residential Mortgage |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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