Correlation Between Two Harbors and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Two Harbors and Annaly Capital 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 Annaly Capital 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 Annaly Capital Management, you can compare the effects of market volatilities on Two Harbors and Annaly Capital 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 Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Harbors and Annaly Capital.
Diversification Opportunities for Two Harbors and Annaly Capital
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Two and Annaly is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investments and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Two Harbors i.e., Two Harbors and Annaly Capital go up and down completely randomly.
Pair Corralation between Two Harbors and Annaly Capital
Considering the 90-day investment horizon Two Harbors Investments is expected to under-perform the Annaly Capital. In addition to that, Two Harbors is 4.43 times more volatile than Annaly Capital Management. It trades about 0.0 of its total potential returns per unit of risk. Annaly Capital Management is currently generating about 0.17 per unit of volatility. If you would invest 2,440 in Annaly Capital Management on August 24, 2024 and sell it today you would earn a total of 153.00 from holding Annaly Capital Management or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Two Harbors Investments vs. Annaly Capital Management
Performance |
| Timeline |
| Two Harbors Investments |
| Annaly Capital Management |
Two Harbors and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Harbors and Annaly Capital
The main advantage of trading using opposite Two Harbors and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Harbors position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital'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 |
| Annaly Capital vs. ACRES Commercial Realty | Annaly Capital vs. Chimera Investment | Annaly Capital vs. Cherry Hill Mortgage | Annaly Capital vs. Cherry Hill Mortgage |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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