Correlation Between Arbor Realty and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Arbor Realty and Cherry Hill 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 Arbor Realty and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Realty Trust and Cherry Hill Mortgage, you can compare the effects of market volatilities on Arbor Realty and Cherry Hill 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 Arbor Realty with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Cherry Hill.
Diversification Opportunities for Arbor Realty and Cherry Hill
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and Cherry is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Cherry Hill Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cherry Hill Mortgage and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with Cherry Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cherry Hill Mortgage has no effect on the direction of Arbor Realty i.e., Arbor Realty and Cherry Hill go up and down completely randomly.
Pair Corralation between Arbor Realty and Cherry Hill
Considering the 90-day investment horizon Arbor Realty Trust is expected to generate 1.74 times more return on investment than Cherry Hill. However, Arbor Realty is 1.74 times more volatile than Cherry Hill Mortgage. It trades about -0.05 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about -0.3 per unit of risk. If you would invest 1,476 in Arbor Realty Trust on August 27, 2024 and sell it today you would lose (18.00) from holding Arbor Realty Trust or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Realty Trust vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Arbor Realty Trust |
| Cherry Hill Mortgage |
Arbor Realty and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and Cherry Hill
The main advantage of trading using opposite Arbor Realty and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty position performs unexpectedly, Cherry Hill 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 Cherry Hill will offset losses from the drop in Cherry Hill's long position.| Arbor Realty vs. Blackstone Mortgage Trust | Arbor Realty vs. Omega Healthcare Investors | Arbor Realty vs. Medical Properties Trust |
| Cherry Hill vs. Annaly Capital Management | Cherry Hill vs. AGNC Investment Corp | Cherry Hill vs. Invesco Mortgage Capital | Cherry Hill vs. Invesco Mortgage Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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