Correlation Between Necessity Retail and New York

Can any of the company-specific risk be diversified away by investing in both Necessity Retail 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 Necessity Retail and New York into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Necessity Retail REIT and New York Mortgage, you can compare the effects of market volatilities on Necessity Retail 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 Necessity Retail with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Necessity Retail and New York.

Diversification Opportunities for Necessity Retail and New York

0.66

Correlation Coefficient

Necessity Retail  New York

Poor diversification

The 3 months correlation between Necessity and New is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT 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 Necessity Retail 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 Necessity Retail REIT 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 Necessity Retail i.e., Necessity Retail and New York go up and down completely randomly.

Pair Corralation between Necessity Retail and New York

If you would invest  2,358  in New York Mortgage on August 31, 2024 and sell it today you would earn a total of  124.00  from holding New York Mortgage or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Necessity Retail REIT  vs.  New York Mortgage

Necessity Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Necessity Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Necessity Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

New York Mortgage

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New York Mortgage are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, New York is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Necessity Retail and New York

The main advantage of trading using opposite Necessity Retail and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Necessity Retail 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 Necessity Retail REIT 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.