Correlation Between Ares Commercial and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Ares Commercial and Sachem Capital 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 Sachem Capital 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 Sachem Capital Corp, you can compare the effects of market volatilities on Ares Commercial and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Commercial and Sachem Capital.
Diversification Opportunities for Ares Commercial and Sachem Capital
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Sachem is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Ares Commercial i.e., Ares Commercial and Sachem Capital go up and down completely randomly.
Pair Corralation between Ares Commercial and Sachem Capital
Given the investment horizon of 90 days Ares Commercial Real is expected to generate 0.56 times more return on investment than Sachem Capital. However, Ares Commercial Real is 1.79 times less risky than Sachem Capital. It trades about 0.23 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about -0.37 per unit of risk. If you would invest 646.00 in Ares Commercial Real on August 28, 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. Sachem Capital Corp
Performance |
| Timeline |
| Ares Commercial Real |
| Sachem Capital Corp |
Ares Commercial and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Commercial and Sachem Capital
The main advantage of trading using opposite Ares Commercial and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Commercial position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital'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 |
| Sachem Capital vs. Apollo Commercial Real | Sachem Capital vs. Ready Capital Corp | Sachem Capital vs. Ellington Residential Mortgage | Sachem Capital vs. KKR Real Estate |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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