Correlation Between Zhihu and MFA Financial
Can any of the company-specific risk be diversified away by investing in both Zhihu 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 Zhihu and MFA Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zhihu Inc ADR and MFA Financial SR, you can compare the effects of market volatilities on Zhihu 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 Zhihu with a short position of MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhihu and MFA Financial.
Diversification Opportunities for Zhihu and MFA Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zhihu and MFA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zhihu Inc ADR and MFA Financial SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial SR and Zhihu 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 Zhihu Inc ADR 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 SR has no effect on the direction of Zhihu i.e., Zhihu and MFA Financial go up and down completely randomly.
Pair Corralation between Zhihu and MFA Financial
If you would invest 0.00 in MFA Financial SR on September 25, 2024 and sell it today you would earn a total of 0.00 from holding MFA Financial SR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.2% |
| Values | Daily Returns |
Zhihu Inc ADR vs. MFA Financial SR
Performance |
| Timeline |
| Zhihu Inc ADR |
| MFA Financial SR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhihu and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhihu and MFA Financial
The main advantage of trading using opposite Zhihu and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhihu 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.The idea behind Zhihu Inc ADR and MFA Financial SR 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.| MFA Financial vs. Barrick Gold Corp | MFA Financial vs. Uranium Energy Corp | MFA Financial vs. AerSale Corp | MFA Financial vs. Albertsons Companies |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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