Correlation Between Orchid Island and Cohen Steers

Can any of the company-specific risk be diversified away by investing in both Orchid Island and Cohen Steers 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 Orchid Island and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orchid Island Capital and Cohen Steers Closed, you can compare the effects of market volatilities on Orchid Island and Cohen Steers 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 Orchid Island with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchid Island and Cohen Steers.

Diversification Opportunities for Orchid Island and Cohen Steers

0.03

Correlation Coefficient

Orchid Island  Cohen Steers

Significant diversification

The 3 months correlation between Orchid and Cohen is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Island Capital and Cohen Steers Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Closed and Orchid Island 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 Orchid Island Capital are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Closed has no effect on the direction of Orchid Island i.e., Orchid Island and Cohen Steers go up and down completely randomly.

Pair Corralation between Orchid Island and Cohen Steers

Considering the 90-day investment horizon Orchid Island is expected to generate 2.45 times less return on investment than Cohen Steers. In addition to that, Orchid Island is 1.81 times more volatile than Cohen Steers Closed. It trades about 0.03 of its total potential returns per unit of risk. Cohen Steers Closed is currently generating about 0.15 per unit of volatility. If you would invest  1,232  in Cohen Steers Closed on September 12, 2024 and sell it today you would earn a total of  80.00  from holding Cohen Steers Closed or generate 6.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Orchid Island Capital  vs.  Cohen Steers Closed

Orchid Island Capital

Risk-Adjusted Performance

2 of 100

Insignificant

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

Cohen Steers Closed

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Closed are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating basic indicators, Cohen Steers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Orchid Island and Cohen Steers

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

The idea behind Orchid Island Capital and Cohen Steers Closed 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.