Correlation Between New York and Granite Point
Can any of the company-specific risk be diversified away by investing in both New York and Granite Point 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 Granite Point 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 Granite Point Mortgage, you can compare the effects of market volatilities on New York and Granite Point 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 Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Granite Point.
Diversification Opportunities for New York and Granite Point
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Granite is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage 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 Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of New York i.e., New York and Granite Point go up and down completely randomly.
Pair Corralation between New York and Granite Point
Assuming the 90 days horizon New York Mortgage is expected to generate 0.74 times more return on investment than Granite Point. However, New York Mortgage is 1.35 times less risky than Granite Point. It trades about 0.12 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about 0.07 per unit of risk. If you would invest 1,799 in New York Mortgage on August 24, 2024 and sell it today you would earn a total of 459.00 from holding New York Mortgage or generate 25.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. Granite Point Mortgage
Performance |
| Timeline |
| New York Mortgage |
| Granite Point Mortgage |
New York and Granite Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Granite Point
The main advantage of trading using opposite New York and Granite Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York position performs unexpectedly, Granite Point 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 Granite Point will offset losses from the drop in Granite Point's long position.| New York vs. ACRES Commercial Realty | New York vs. Chimera Investment | New York vs. Cherry Hill Mortgage | New York vs. Cherry Hill Mortgage |
| Granite Point vs. PennyMac Mortgage Investment | Granite Point vs. Rithm Capital Corp | Granite Point vs. ARMOUR Residential REIT | Granite Point vs. MFA Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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