Correlation Between ACRES Commercial and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both ACRES Commercial 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 ACRES Commercial and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACRES Commercial Realty and Cherry Hill Mortgage, you can compare the effects of market volatilities on ACRES Commercial 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 ACRES Commercial with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Cherry Hill.
Diversification Opportunities for ACRES Commercial and Cherry Hill
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACRES and Cherry is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty 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 ACRES Commercial 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 ACRES Commercial Realty 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 ACRES Commercial i.e., ACRES Commercial and Cherry Hill go up and down completely randomly.
Pair Corralation between ACRES Commercial and Cherry Hill
Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 1.23 times more return on investment than Cherry Hill. However, ACRES Commercial is 1.23 times more volatile than Cherry Hill Mortgage. It trades about 0.0 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 2,282 in ACRES Commercial Realty on August 27, 2024 and sell it today you would lose (2.00) from holding ACRES Commercial Realty or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACRES Commercial Realty vs. Cherry Hill Mortgage
Performance |
| Timeline |
| ACRES Commercial Realty |
| Cherry Hill Mortgage |
ACRES Commercial and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACRES Commercial and Cherry Hill
The main advantage of trading using opposite ACRES Commercial and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial 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.The idea behind ACRES Commercial Realty and Cherry Hill Mortgage 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.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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