Correlation Between Orchid Island and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Orchid Island and Stone Harbor 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 Orchid Island and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orchid Island Capital and Stone Harbor Emerging, you can compare the effects of market volatilities on Orchid Island and Stone Harbor 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 Orchid Island with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchid Island and Stone Harbor.
Diversification Opportunities for Orchid Island and Stone Harbor
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orchid and Stone is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Island Capital and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging and Orchid Island 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 Orchid Island Capital are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Orchid Island i.e., Orchid Island and Stone Harbor go up and down completely randomly.
Pair Corralation between Orchid Island and Stone Harbor
Considering the 90-day investment horizon Orchid Island is expected to generate 1.75 times less return on investment than Stone Harbor. In addition to that, Orchid Island is 1.02 times more volatile than Stone Harbor Emerging. It trades about 0.04 of its total potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.08 per unit of volatility. If you would invest 390.00 in Stone Harbor Emerging on November 9, 2024 and sell it today you would earn a total of 124.00 from holding Stone Harbor Emerging or generate 31.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orchid Island Capital vs. Stone Harbor Emerging
Performance |
| Timeline |
| Orchid Island Capital |
| Stone Harbor Emerging |
Orchid Island and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orchid Island and Stone Harbor
The main advantage of trading using opposite Orchid Island and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchid Island position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Orchid Island vs. AGNC Investment Corp | Orchid Island vs. Two Harbors Investments | Orchid Island vs. Invesco Mortgage Capital | Orchid Island vs. Chimera Investment |
| Stone Harbor vs. Virtus Global Multi | Stone Harbor vs. Aberdeen Global IF | Stone Harbor vs. Cushing Mlp Total | Stone Harbor vs. Aberdeen Asia Pacific If |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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