Correlation Between Ares Commercial and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Ares 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 Ares 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 Ares Commercial Real and Cherry Hill Mortgage, you can compare the effects of market volatilities on Ares 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 Ares Commercial with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Commercial and Cherry Hill.
Diversification Opportunities for Ares Commercial and Cherry Hill
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Cherry is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real 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 Ares 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 Ares Commercial Real 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 Ares Commercial i.e., Ares Commercial and Cherry Hill go up and down completely randomly.
Pair Corralation between Ares Commercial and Cherry Hill
Given the investment horizon of 90 days Ares Commercial Real is expected to generate 0.96 times more return on investment than Cherry Hill. However, Ares Commercial Real is 1.04 times less risky than Cherry Hill. It trades about 0.23 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about -0.37 per unit of risk. If you would invest 646.00 in Ares Commercial Real on August 27, 2024 and sell it today you would earn a total of 83.00 from holding Ares Commercial Real or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Commercial Real vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Ares Commercial Real |
| Cherry Hill Mortgage |
Ares Commercial and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Commercial and Cherry Hill
The main advantage of trading using opposite Ares Commercial and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares 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.| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
| Cherry Hill vs. Ellington Financial | Cherry Hill vs. Dynex Capital | Cherry Hill vs. Ares Commercial Real | Cherry Hill vs. Chimera 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |