Correlation Between New York and MFA Financial
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and MFA Financial 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 MFA Financial, you can compare the effects of market volatilities on New York 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 New York with a short position of MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and MFA Financial.
Diversification Opportunities for New York and MFA Financial
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and MFA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial 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 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 New York i.e., New York and MFA Financial go up and down completely randomly.
Pair Corralation between New York and MFA Financial
Assuming the 90 days horizon New York Mortgage is expected to generate 0.77 times more return on investment than MFA Financial. However, New York Mortgage is 1.29 times less risky than MFA Financial. It trades about 0.26 of its potential returns per unit of risk. MFA Financial is currently generating about 0.0 per unit of risk. If you would invest 2,195 in New York Mortgage on August 27, 2024 and sell it today you would earn a total of 71.00 from holding New York Mortgage or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. MFA Financial
Performance |
| Timeline |
| New York Mortgage |
| MFA Financial |
New York and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and MFA Financial
The main advantage of trading using opposite New York and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. New York Mortgage | New York vs. New York Mortgage | New York vs. New York Mortgage | New York vs. AGNC Investment Corp |
| MFA Financial vs. New York Mortgage | MFA Financial vs. New York Mortgage | MFA Financial vs. Two Harbors Investment | 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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