Correlation Between Two Harbors and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both Two Harbors and Arbor Realty 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 Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Two Harbors Investments and Arbor Realty Trust, you can compare the effects of market volatilities on Two Harbors and Arbor Realty 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 Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Harbors and Arbor Realty.
Diversification Opportunities for Two Harbors and Arbor Realty
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Two and Arbor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investments and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust 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 Investments are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Two Harbors i.e., Two Harbors and Arbor Realty go up and down completely randomly.
Pair Corralation between Two Harbors and Arbor Realty
Considering the 90-day investment horizon Two Harbors Investments is expected to under-perform the Arbor Realty. In addition to that, Two Harbors is 1.54 times more volatile than Arbor Realty Trust. It trades about -0.21 of its total potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.01 per unit of volatility. If you would invest 1,476 in Arbor Realty Trust on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Arbor Realty Trust or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Two Harbors Investments vs. Arbor Realty Trust
Performance |
| Timeline |
| Two Harbors Investments |
| Arbor Realty Trust |
Two Harbors and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Harbors and Arbor Realty
The main advantage of trading using opposite Two Harbors and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Harbors position performs unexpectedly, Arbor Realty 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 Arbor Realty will offset losses from the drop in Arbor Realty's long position.| Two Harbors vs. New York Mortgage | Two Harbors vs. ARMOUR Residential REIT | Two Harbors vs. Annaly Capital Management | Two Harbors vs. AGNC Investment Corp |
| Arbor Realty vs. Blackstone Mortgage Trust | Arbor Realty vs. Omega Healthcare Investors | Arbor Realty vs. Medical Properties Trust |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |