Correlation Between Arbor Realty and Two Harbors
Can any of the company-specific risk be diversified away by investing in both Arbor Realty and Two Harbors 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 Arbor Realty and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Realty Trust and Two Harbors Investments, you can compare the effects of market volatilities on Arbor Realty and Two Harbors 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 Arbor Realty with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Two Harbors.
Diversification Opportunities for Arbor Realty and Two Harbors
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arbor and Two is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Two Harbors Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Harbors Investments and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with Two Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Harbors Investments has no effect on the direction of Arbor Realty i.e., Arbor Realty and Two Harbors go up and down completely randomly.
Pair Corralation between Arbor Realty and Two Harbors
Considering the 90-day investment horizon Arbor Realty Trust is expected to generate 0.65 times more return on investment than Two Harbors. However, Arbor Realty Trust is 1.53 times less risky than Two Harbors. It trades about 0.01 of its potential returns per unit of risk. Two Harbors Investments is currently generating about -0.22 per unit of risk. If you would invest 1,476 in Arbor Realty Trust on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Arbor Realty Trust or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Realty Trust vs. Two Harbors Investments
Performance |
| Timeline |
| Arbor Realty Trust |
| Two Harbors Investments |
Arbor Realty and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and Two Harbors
The main advantage of trading using opposite Arbor Realty and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty position performs unexpectedly, Two Harbors 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 Two Harbors will offset losses from the drop in Two Harbors' long position.| Arbor Realty vs. Blackstone Mortgage Trust | Arbor Realty vs. Omega Healthcare Investors | Arbor Realty vs. Medical Properties Trust |
| Two Harbors vs. New York Mortgage | Two Harbors vs. ARMOUR Residential REIT | Two Harbors vs. Annaly Capital Management | Two Harbors 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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