Correlation Between Two Harbors and Valneva SE

Can any of the company-specific risk be diversified away by investing in both Two Harbors and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on Two Harbors and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Harbors and Valneva SE.

Diversification Opportunities for Two Harbors and Valneva SE

-0.52

Correlation Coefficient

Two Harbors  Valneva SE

Excellent diversification

The 3 months correlation between Two and Valneva is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investments and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Two Harbors i.e., Two Harbors and Valneva SE go up and down completely randomly.

Pair Corralation between Two Harbors and Valneva SE

Assuming the 90 days trading horizon Two Harbors Investments is expected to generate 0.09 times more return on investment than Valneva SE. However, Two Harbors Investments is 10.98 times less risky than Valneva SE. It trades about 0.03 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.09 per unit of risk. If you would invest  2,470  in Two Harbors Investments on October 27, 2024 and sell it today you would earn a total of  13.00  from holding Two Harbors Investments or generate 0.53% 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.  Valneva SE ADR

Two Harbors Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Two Harbors Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Two Harbors is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Two Harbors and Valneva SE

The main advantage of trading using opposite Two Harbors and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Harbors position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.

The idea behind Two Harbors Investments and Valneva SE ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..