Correlation Between Niagara Mohawk and Two Harbors
Can any of the company-specific risk be diversified away by investing in both Niagara Mohawk 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 Niagara Mohawk and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niagara Mohawk Power and Two Harbors Investments, you can compare the effects of market volatilities on Niagara Mohawk 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 Niagara Mohawk with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niagara Mohawk and Two Harbors.
Diversification Opportunities for Niagara Mohawk and Two Harbors
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Niagara and Two is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Niagara Mohawk Power 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 Niagara Mohawk 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 Niagara Mohawk Power 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 Niagara Mohawk i.e., Niagara Mohawk and Two Harbors go up and down completely randomly.
Pair Corralation between Niagara Mohawk and Two Harbors
Assuming the 90 days horizon Niagara Mohawk Power is expected to under-perform the Two Harbors. In addition to that, Niagara Mohawk is 4.02 times more volatile than Two Harbors Investments. It trades about -0.1 of its total potential returns per unit of risk. Two Harbors Investments is currently generating about 0.08 per unit of volatility. If you would invest 2,479 in Two Harbors Investments on October 9, 2024 and sell it today you would earn a total of 11.00 from holding Two Harbors Investments or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Niagara Mohawk Power vs. Two Harbors Investments
Performance |
| Timeline |
| Niagara Mohawk Power |
| Two Harbors Investments |
Niagara Mohawk and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niagara Mohawk and Two Harbors
The main advantage of trading using opposite Niagara Mohawk and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niagara Mohawk 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.| Niagara Mohawk vs. Sonida Senior Living | Niagara Mohawk vs. The Coca Cola | Niagara Mohawk vs. ScanSource | Niagara Mohawk vs. Cardinal Health |
| Two Harbors vs. Legacy Education | Two Harbors vs. Apple Inc | Two Harbors vs. NVIDIA | Two Harbors vs. Microsoft |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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