Correlation Between Cherry Hill and Dynex Capital
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and Dynex 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 Cherry Hill and Dynex Capital 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 Dynex Capital, you can compare the effects of market volatilities on Cherry Hill and Dynex 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 Cherry Hill with a short position of Dynex Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Dynex Capital.
Diversification Opportunities for Cherry Hill and Dynex Capital
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cherry and Dynex is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Dynex Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynex Capital 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 Dynex Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynex Capital has no effect on the direction of Cherry Hill i.e., Cherry Hill and Dynex Capital go up and down completely randomly.
Pair Corralation between Cherry Hill and Dynex Capital
Assuming the 90 days trading horizon Cherry Hill is expected to generate 5.28 times less return on investment than Dynex Capital. In addition to that, Cherry Hill is 3.2 times more volatile than Dynex Capital. It trades about 0.01 of its total potential returns per unit of risk. Dynex Capital is currently generating about 0.17 per unit of volatility. If you would invest 2,399 in Dynex Capital on September 3, 2024 and sell it today you would earn a total of 157.00 from holding Dynex Capital or generate 6.54% 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. Dynex Capital
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Dynex Capital |
Cherry Hill and Dynex Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Dynex Capital
The main advantage of trading using opposite Cherry Hill and Dynex Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, Dynex 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 Dynex Capital will offset losses from the drop in Dynex Capital's long position.| Cherry Hill vs. Lument Finance Trust | Cherry Hill vs. PennyMac Mortgage Investment | Cherry Hill vs. AG Mortgage Investment | Cherry Hill vs. Invesco Mortgage Capital |
| Dynex Capital vs. ARMOUR Residential REIT | Dynex Capital vs. Annaly Capital Management | Dynex Capital vs. AGNC Investment Corp | Dynex Capital 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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