Correlation Between Two Harbors and Extendicare
Can any of the company-specific risk be diversified away by investing in both Two Harbors and Extendicare 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 Two Harbors and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Two Harbors Investment and Extendicare, you can compare the effects of market volatilities on Two Harbors and Extendicare 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 Two Harbors with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Harbors and Extendicare.
Diversification Opportunities for Two Harbors and Extendicare
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Two and Extendicare is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investment and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and Two Harbors 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 Two Harbors Investment are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of Two Harbors i.e., Two Harbors and Extendicare go up and down completely randomly.
Pair Corralation between Two Harbors and Extendicare
Assuming the 90 days trading horizon Two Harbors Investment is expected to generate 1.08 times more return on investment than Extendicare. However, Two Harbors is 1.08 times more volatile than Extendicare. It trades about 0.09 of its potential returns per unit of risk. Extendicare is currently generating about 0.09 per unit of risk. If you would invest 1,534 in Two Harbors Investment on August 30, 2024 and sell it today you would earn a total of 842.00 from holding Two Harbors Investment or generate 54.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.47% |
| Values | Daily Returns |
Two Harbors Investment vs. Extendicare
Performance |
| Timeline |
| Two Harbors Investment |
| Extendicare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Two Harbors and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Harbors and Extendicare
The main advantage of trading using opposite Two Harbors and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Harbors position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.| Two Harbors vs. Two Harbors Investment | Two Harbors vs. Invesco Mortgage Capital | Two Harbors vs. Chimera Investment | Two Harbors vs. MFA Financial |
| Extendicare vs. Ramsay Health Care | Extendicare vs. Jack Nathan Medical | Extendicare vs. Nova Leap Health | Extendicare vs. Fresenius SE Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |