Correlation Between Qudian and New York
Can any of the company-specific risk be diversified away by investing in both Qudian 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 Qudian and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and New York Mortgage, you can compare the effects of market volatilities on Qudian 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 Qudian with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and New York.
Diversification Opportunities for Qudian and New York
Excellent diversification
The 3 months correlation between Qudian and New is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc 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 Qudian 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 Qudian Inc 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 Qudian i.e., Qudian and New York go up and down completely randomly.
Pair Corralation between Qudian and New York
Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 3.94 times more return on investment than New York. However, Qudian is 3.94 times more volatile than New York Mortgage. It trades about 0.19 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.33 per unit of risk. If you would invest 232.00 in Qudian Inc on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Qudian Inc or generate 31.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. New York Mortgage
Performance |
| Timeline |
| Qudian Inc |
| New York Mortgage |
Qudian and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and New York
The main advantage of trading using opposite Qudian and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian 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.The idea behind Qudian Inc and New York Mortgage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| New York vs. Two Harbors Investments | New York vs. ARMOUR Residential REIT | New York vs. Annaly Capital Management | New York vs. AGNC Investment Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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