Correlation Between Orchid Island and New York
Can any of the company-specific risk be diversified away by investing in both Orchid Island and New York 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 Orchid Island and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orchid Island Capital and New York Mortgage, you can compare the effects of market volatilities on Orchid Island and New York 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 Orchid Island with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchid Island and New York.
Diversification Opportunities for Orchid Island and New York
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orchid and New is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Island Capital and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage and Orchid Island 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 Orchid Island Capital are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Orchid Island i.e., Orchid Island and New York go up and down completely randomly.
Pair Corralation between Orchid Island and New York
Considering the 90-day investment horizon Orchid Island is expected to generate 6.06 times less return on investment than New York. In addition to that, Orchid Island is 1.77 times more volatile than New York Mortgage. It trades about 0.01 of its total potential returns per unit of risk. New York Mortgage is currently generating about 0.11 per unit of volatility. If you would invest 2,054 in New York Mortgage on August 24, 2024 and sell it today you would earn a total of 204.00 from holding New York Mortgage or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orchid Island Capital vs. New York Mortgage
Performance |
| Timeline |
| Orchid Island Capital |
| New York Mortgage |
Orchid Island and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orchid Island and New York
The main advantage of trading using opposite Orchid Island and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchid Island position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| Orchid Island vs. AGNC Investment Corp | Orchid Island vs. Two Harbors Investments | Orchid Island vs. Invesco Mortgage Capital | Orchid Island vs. Chimera Investment |
| New York vs. ACRES Commercial Realty | New York vs. Chimera Investment | New York vs. Cherry Hill Mortgage | New York vs. Cherry Hill 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 CEOs Directory module to screen CEOs from public companies around the world.
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