Correlation Between Cherry Hill and DigitalBridge
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and DigitalBridge 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 Cherry Hill and DigitalBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cherry Hill Mortgage and DigitalBridge Group, you can compare the effects of market volatilities on Cherry Hill and DigitalBridge 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 Cherry Hill with a short position of DigitalBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and DigitalBridge.
Diversification Opportunities for Cherry Hill and DigitalBridge
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cherry and DigitalBridge is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group and Cherry Hill 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 Cherry Hill Mortgage are associated (or correlated) with DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of Cherry Hill i.e., Cherry Hill and DigitalBridge go up and down completely randomly.
Pair Corralation between Cherry Hill and DigitalBridge
Assuming the 90 days trading horizon Cherry Hill Mortgage is expected to generate 1.51 times more return on investment than DigitalBridge. However, Cherry Hill is 1.51 times more volatile than DigitalBridge Group. It trades about 0.2 of its potential returns per unit of risk. DigitalBridge Group is currently generating about 0.15 per unit of risk. If you would invest 2,200 in Cherry Hill Mortgage on September 27, 2024 and sell it today you would earn a total of 119.00 from holding Cherry Hill Mortgage or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. DigitalBridge Group
Performance |
| Timeline |
| Cherry Hill Mortgage |
| DigitalBridge Group |
Cherry Hill and DigitalBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and DigitalBridge
The main advantage of trading using opposite Cherry Hill and DigitalBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, DigitalBridge 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 DigitalBridge will offset losses from the drop in DigitalBridge's long position.| Cherry Hill vs. Two Harbors Investment | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment |
| DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. Chimera Investment | DigitalBridge vs. Cherry Hill Mortgage |
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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