Correlation Between Titan Company and Annaly Capital

Can any of the company-specific risk be diversified away by investing in both Titan Company and Annaly Capital 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 Titan Company and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Company Limited and Annaly Capital Management, you can compare the effects of market volatilities on Titan Company and Annaly Capital 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 Titan Company with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Annaly Capital.

Diversification Opportunities for Titan Company and Annaly Capital

-0.71

Correlation Coefficient

Titan Company  Annaly Capital

Pay attention - limited upside

The 3 months correlation between Titan and Annaly is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management and Titan Company 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 Titan Company Limited are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Titan Company i.e., Titan Company and Annaly Capital go up and down completely randomly.

Pair Corralation between Titan Company and Annaly Capital

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Annaly Capital. In addition to that, Titan Company is 4.55 times more volatile than Annaly Capital Management. It trades about -0.12 of its total potential returns per unit of risk. Annaly Capital Management is currently generating about 0.08 per unit of volatility. If you would invest  2,506  in Annaly Capital Management on September 3, 2024 and sell it today you would earn a total of  39.00  from holding Annaly Capital Management or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Titan Company Limited  vs.  Annaly Capital Management

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Annaly Capital Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Annaly Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Titan Company and Annaly Capital

The main advantage of trading using opposite Titan Company and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.

The idea behind Titan Company Limited and Annaly Capital Management 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.