Correlation Between 456837AV5 and Two Harbors

Can any of the company-specific risk be diversified away by investing in both 456837AV5 and Two Harbors 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 456837AV5 and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ING GROEP NV and Two Harbors Investments, you can compare the effects of market volatilities on 456837AV5 and Two Harbors 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 456837AV5 with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of 456837AV5 and Two Harbors.

Diversification Opportunities for 456837AV5 and Two Harbors

0.13

Correlation Coefficient

456837AV5  Two Harbors

Average diversification

The 3 months correlation between 456837AV5 and Two is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ING GROEP NV and Two Harbors Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Harbors Investments and 456837AV5 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 ING GROEP NV are associated (or correlated) with Two Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Harbors Investments has no effect on the direction of 456837AV5 i.e., 456837AV5 and Two Harbors go up and down completely randomly.

Pair Corralation between 456837AV5 and Two Harbors

Assuming the 90 days trading horizon ING GROEP NV is expected to generate 0.6 times more return on investment than Two Harbors. However, ING GROEP NV is 1.68 times less risky than Two Harbors. It trades about 0.07 of its potential returns per unit of risk. Two Harbors Investments is currently generating about 0.03 per unit of risk. If you would invest  9,613  in ING GROEP NV on December 25, 2024 and sell it today you would earn a total of  67.00  from holding ING GROEP NV or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.97%
Values	Daily Returns

ING GROEP NV  vs.  Two Harbors Investments

ING GROEP NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ING GROEP NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 456837AV5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Two Harbors Investments

Risk-Adjusted Performance

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.

Pair Trading with 456837AV5 and Two Harbors

The main advantage of trading using opposite 456837AV5 and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 456837AV5 position performs unexpectedly, Two Harbors 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 Two Harbors will offset losses from the drop in Two Harbors' long position.

The idea behind ING GROEP NV and Two Harbors Investments 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.