Correlation Between MFA Financial and Ladder Capital
Can any of the company-specific risk be diversified away by investing in both MFA Financial and Ladder 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 MFA Financial and Ladder Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFA Financial and Ladder Capital Corp, you can compare the effects of market volatilities on MFA Financial and Ladder 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 MFA Financial with a short position of Ladder Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFA Financial and Ladder Capital.
Diversification Opportunities for MFA Financial and Ladder Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFA and Ladder is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MFA Financial and Ladder Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Corp and MFA Financial 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 MFA Financial are associated (or correlated) with Ladder Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Corp has no effect on the direction of MFA Financial i.e., MFA Financial and Ladder Capital go up and down completely randomly.
Pair Corralation between MFA Financial and Ladder Capital
Considering the 90-day investment horizon MFA Financial is expected to generate 1.33 times more return on investment than Ladder Capital. However, MFA Financial is 1.33 times more volatile than Ladder Capital Corp. It trades about 0.01 of its potential returns per unit of risk. Ladder Capital Corp is currently generating about -0.03 per unit of risk. If you would invest 923.00 in MFA Financial on August 16, 2025 and sell it today you would earn a total of 3.00 from holding MFA Financial or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFA Financial vs. Ladder Capital Corp
Performance |
| Timeline |
| MFA Financial |
| Ladder Capital Corp |
MFA Financial and Ladder Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFA Financial and Ladder Capital
The main advantage of trading using opposite MFA Financial and Ladder Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFA Financial position performs unexpectedly, Ladder 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 Ladder Capital will offset losses from the drop in Ladder Capital's long position.| MFA Financial vs. Franklin BSP Realty | MFA Financial vs. Chimera Investment | MFA Financial vs. PennyMac Mortgage Investment | MFA Financial vs. Two Harbors Investments |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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