Correlation Between Two Harbors and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both Two Harbors and Chimera Investment 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 Chimera Investment 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 Chimera Investment, you can compare the effects of market volatilities on Two Harbors and Chimera Investment 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 Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Harbors and Chimera Investment.
Diversification Opportunities for Two Harbors and Chimera Investment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Two and Chimera is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investments and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Two Harbors i.e., Two Harbors and Chimera Investment go up and down completely randomly.
Pair Corralation between Two Harbors and Chimera Investment
Considering the 90-day investment horizon Two Harbors Investments is expected to generate 0.9 times more return on investment than Chimera Investment. However, Two Harbors Investments is 1.11 times less risky than Chimera Investment. It trades about 0.18 of its potential returns per unit of risk. Chimera Investment is currently generating about 0.08 per unit of risk. If you would invest 1,142 in Two Harbors Investments on October 21, 2024 and sell it today you would earn a total of 52.00 from holding Two Harbors Investments or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Two Harbors Investments vs. Chimera Investment
Performance |
| Timeline |
| Two Harbors Investments |
| Chimera Investment |
Two Harbors and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Harbors and Chimera Investment
The main advantage of trading using opposite Two Harbors and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Harbors position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment'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 |
| Chimera Investment vs. Two Harbors Investments | Chimera Investment vs. MFA Financial | Chimera Investment vs. Invesco Mortgage Capital | Chimera Investment vs. Orchid Island Capital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |