Correlation Between Stifel Financial and Two Harbors
Can any of the company-specific risk be diversified away by investing in both Stifel Financial 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 Stifel Financial and Two Harbors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial and Two Harbors Investments, you can compare the effects of market volatilities on Stifel Financial 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 Stifel Financial with a short position of Two Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Two Harbors.
Diversification Opportunities for Stifel Financial and Two Harbors
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stifel and Two is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial 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 Stifel Financial 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 Stifel Financial 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 Stifel Financial i.e., Stifel Financial and Two Harbors go up and down completely randomly.
Pair Corralation between Stifel Financial and Two Harbors
Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 1.56 times more return on investment than Two Harbors. However, Stifel Financial is 1.56 times more volatile than Two Harbors Investments. It trades about 0.12 of its potential returns per unit of risk. Two Harbors Investments is currently generating about -0.12 per unit of risk. If you would invest 9,257 in Stifel Financial on September 26, 2024 and sell it today you would earn a total of 1,471 from holding Stifel Financial or generate 15.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Stifel Financial vs. Two Harbors Investments
Performance |
Timeline |
Stifel Financial |
Two Harbors Investments |
Stifel Financial and Two Harbors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stifel Financial and Two Harbors
The main advantage of trading using opposite Stifel Financial and Two Harbors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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.Stifel Financial vs. Visa Class A | Stifel Financial vs. Diamond Hill Investment | Stifel Financial vs. Distoken Acquisition | Stifel Financial vs. AllianceBernstein Holding LP |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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