Correlation Between Great Ajax and Two Harbors
Can any of the company-specific risk be diversified away by investing in both Great Ajax 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 Great Ajax and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Ajax Corp and Two Harbors Investments, you can compare the effects of market volatilities on Great Ajax 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 Great Ajax with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Ajax and Two Harbors.
Diversification Opportunities for Great Ajax and Two Harbors
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Two is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Great Ajax Corp 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 Great Ajax 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 Great Ajax Corp 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 Great Ajax i.e., Great Ajax and Two Harbors go up and down completely randomly.
Pair Corralation between Great Ajax and Two Harbors
Considering the 90-day investment horizon Great Ajax Corp is expected to generate 1.58 times more return on investment than Two Harbors. However, Great Ajax is 1.58 times more volatile than Two Harbors Investments. It trades about -0.02 of its potential returns per unit of risk. Two Harbors Investments is currently generating about -0.17 per unit of risk. If you would invest 314.00 in Great Ajax Corp on August 28, 2024 and sell it today you would lose (13.00) from holding Great Ajax Corp or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Ajax Corp vs. Two Harbors Investments
Performance |
| Timeline |
| Great Ajax Corp |
| Two Harbors Investments |
Great Ajax and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Ajax and Two Harbors
The main advantage of trading using opposite Great Ajax and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Ajax 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.| Great Ajax vs. Blackstone Mortgage Trust | Great Ajax vs. Omega Healthcare Investors | Great Ajax 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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