Correlation Between Redwood Trust and New York
Can any of the company-specific risk be diversified away by investing in both Redwood Trust 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 Redwood Trust and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Trust and New York Mortgage, you can compare the effects of market volatilities on Redwood Trust 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 Redwood Trust with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Trust and New York.
Diversification Opportunities for Redwood Trust and New York
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Redwood and New is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Trust 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 Redwood Trust 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 Redwood Trust 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 Redwood Trust i.e., Redwood Trust and New York go up and down completely randomly.
Pair Corralation between Redwood Trust and New York
Considering the 90-day investment horizon Redwood Trust is expected to under-perform the New York. But the stock apears to be less risky and, when comparing its historical volatility, Redwood Trust is 1.24 times less risky than New York. The stock trades about -0.06 of its potential returns per unit of risk. The New York Mortgage is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 584.00 in New York Mortgage on October 24, 2024 and sell it today you would earn a total of 13.00 from holding New York Mortgage or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Redwood Trust vs. New York Mortgage
Performance |
| Timeline |
| Redwood Trust |
| New York Mortgage |
Redwood Trust and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Trust and New York
The main advantage of trading using opposite Redwood Trust and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Trust 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.| Redwood Trust vs. Two Harbors Investments | Redwood Trust vs. AG Mortgage Investment | Redwood Trust vs. Invesco Mortgage Capital | Redwood Trust vs. MFA Financial |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |