Correlation Between Two Harbors and Broadmark Realty

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

Diversification Opportunities for Two Harbors and Broadmark Realty

-0.47

Correlation Coefficient

Two Harbors  Broadmark Realty

Very good diversification

The 3 months correlation between Two and Broadmark is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Two Harbors Investments and Broadmark Realty Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadmark Realty Capital 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 Broadmark Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadmark Realty Capital has no effect on the direction of Two Harbors i.e., Two Harbors and Broadmark Realty go up and down completely randomly.

Pair Corralation between Two Harbors and Broadmark Realty

If you would invest  482.00  in Broadmark Realty Capital on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Broadmark Realty Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Two Harbors Investments  vs.  Broadmark Realty Capital

Two Harbors Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Two Harbors Investments 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Broadmark Realty Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadmark Realty Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Broadmark Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Two Harbors and Broadmark Realty

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

The idea behind Two Harbors Investments and Broadmark Realty Capital 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.