Correlation Between Starwood Property and New York
Can any of the company-specific risk be diversified away by investing in both Starwood Property 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 Starwood Property and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Starwood Property Trust and New York Mortgage, you can compare the effects of market volatilities on Starwood Property 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 Starwood Property with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Starwood Property and New York.
Diversification Opportunities for Starwood Property and New York
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Starwood and New is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Starwood Property 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 Starwood Property 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 Starwood Property 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 Starwood Property i.e., Starwood Property and New York go up and down completely randomly.
Pair Corralation between Starwood Property and New York
Given the investment horizon of 90 days Starwood Property is expected to generate 10.2 times less return on investment than New York. But when comparing it to its historical volatility, Starwood Property Trust is 2.12 times less risky than New York. It trades about 0.09 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 528.00 in New York Mortgage on August 27, 2024 and sell it today you would earn a total of 86.00 from holding New York Mortgage or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Starwood Property Trust vs. New York Mortgage
Performance |
| Timeline |
| Starwood Property Trust |
| New York Mortgage |
Starwood Property and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Starwood Property and New York
The main advantage of trading using opposite Starwood Property and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starwood Property 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.| Starwood Property vs. Blackstone Mortgage Trust | Starwood Property vs. Arbor Realty Trust | Starwood Property vs. Apollo Commercial Real | Starwood Property vs. Omega Healthcare Investors |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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