Correlation Between Great Ajax and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both Great Ajax 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 Great Ajax and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Ajax Corp and Chimera Investment, you can compare the effects of market volatilities on Great Ajax 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 Great Ajax with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Ajax and Chimera Investment.
Diversification Opportunities for Great Ajax and Chimera Investment
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Chimera is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Great Ajax Corp and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and Great Ajax 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 Great Ajax Corp 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 Great Ajax i.e., Great Ajax and Chimera Investment go up and down completely randomly.
Pair Corralation between Great Ajax and Chimera Investment
Considering the 90-day investment horizon Great Ajax Corp is expected to under-perform the Chimera Investment. In addition to that, Great Ajax is 1.62 times more volatile than Chimera Investment. It trades about -0.2 of its total potential returns per unit of risk. Chimera Investment is currently generating about 0.18 per unit of volatility. If you would invest 2,338 in Chimera Investment on August 27, 2024 and sell it today you would earn a total of 66.00 from holding Chimera Investment or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Ajax Corp vs. Chimera Investment
Performance |
| Timeline |
| Great Ajax Corp |
| Chimera Investment |
Great Ajax and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Ajax and Chimera Investment
The main advantage of trading using opposite Great Ajax and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Ajax 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.| Great Ajax vs. Ellington Financial | Great Ajax vs. Dynex Capital | Great Ajax vs. Ares Commercial Real | Great Ajax vs. Cherry Hill Mortgage |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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