Correlation Between Sachem Capital and MFA Financial
Can any of the company-specific risk be diversified away by investing in both Sachem Capital 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 Sachem Capital and MFA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sachem Capital Corp and MFA Financial, you can compare the effects of market volatilities on Sachem Capital 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 Sachem Capital with a short position of MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and MFA Financial.
Diversification Opportunities for Sachem Capital and MFA Financial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sachem and MFA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial and Sachem Capital 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 Sachem Capital Corp 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 Sachem Capital i.e., Sachem Capital and MFA Financial go up and down completely randomly.
Pair Corralation between Sachem Capital and MFA Financial
Assuming the 90 days trading horizon Sachem Capital Corp is expected to generate 5.18 times more return on investment than MFA Financial. However, Sachem Capital is 5.18 times more volatile than MFA Financial. It trades about 0.28 of its potential returns per unit of risk. MFA Financial is currently generating about 0.13 per unit of risk. If you would invest 1,590 in Sachem Capital Corp on November 9, 2024 and sell it today you would earn a total of 216.00 from holding Sachem Capital Corp or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sachem Capital Corp vs. MFA Financial
Performance |
| Timeline |
| Sachem Capital Corp |
| MFA Financial |
Sachem Capital and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sachem Capital and MFA Financial
The main advantage of trading using opposite Sachem Capital and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sachem Capital 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.| Sachem Capital vs. SiriusPoint | Sachem Capital vs. Harrow Health 8625 | Sachem Capital vs. XOMA Corporation | Sachem Capital vs. New York Mortgage |
| MFA Financial vs. MFA Financial | MFA Financial vs. ARMOUR Residential REIT | MFA Financial vs. Annaly Capital Management | 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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