Correlation Between ACRES Commercial and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and Chimera Investment 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 Chimera Investment 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 Chimera Investment, you can compare the effects of market volatilities on ACRES Commercial and Chimera Investment 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 Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Chimera Investment.
Diversification Opportunities for ACRES Commercial and Chimera Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACRES and Chimera is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and Chimera Investment go up and down completely randomly.
Pair Corralation between ACRES Commercial and Chimera Investment
Assuming the 90 days trading horizon ACRES Commercial is expected to generate 1.15 times less return on investment than Chimera Investment. In addition to that, ACRES Commercial is 1.17 times more volatile than Chimera Investment. It trades about 0.06 of its total potential returns per unit of risk. Chimera Investment is currently generating about 0.08 per unit of volatility. If you would invest 1,530 in Chimera Investment on August 27, 2024 and sell it today you would earn a total of 874.00 from holding Chimera Investment or generate 57.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACRES Commercial Realty vs. Chimera Investment
Performance |
| Timeline |
| ACRES Commercial Realty |
| Chimera Investment |
ACRES Commercial and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACRES Commercial and Chimera Investment
The main advantage of trading using opposite ACRES Commercial and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.The idea behind ACRES Commercial Realty and Chimera Investment 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.| Chimera Investment vs. Chimera Investment | Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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