Correlation Between New York and Two Harbors
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and Two Harbors Investments, you can compare the effects of market volatilities on New York 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 New York with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Two Harbors.
Diversification Opportunities for New York and Two Harbors
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Two is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage 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 New York 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 New York Mortgage 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 New York i.e., New York and Two Harbors go up and down completely randomly.
Pair Corralation between New York and Two Harbors
Given the investment horizon of 90 days New York is expected to generate 4.12 times less return on investment than Two Harbors. But when comparing it to its historical volatility, New York Mortgage is 1.56 times less risky than Two Harbors. It trades about 0.13 of its potential returns per unit of risk. Two Harbors Investments is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,194 in Two Harbors Investments on November 18, 2024 and sell it today you would earn a total of 158.00 from holding Two Harbors Investments or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. Two Harbors Investments
Performance |
| Timeline |
| New York Mortgage |
| Two Harbors Investments |
New York and Two Harbors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Two Harbors
The main advantage of trading using opposite New York and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. Two Harbors Investments | New York vs. ARMOUR Residential REIT | New York vs. Annaly Capital Management | New York vs. AGNC Investment Corp |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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