Correlation Between Cherry Hill and Global Net
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Cherry Hill and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Global Net.
Diversification Opportunities for Cherry Hill and Global Net
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cherry and Global is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Cherry Hill i.e., Cherry Hill and Global Net go up and down completely randomly.
Pair Corralation between Cherry Hill and Global Net
Assuming the 90 days trading horizon Cherry Hill Mortgage is expected to generate 0.45 times more return on investment than Global Net. However, Cherry Hill Mortgage is 2.21 times less risky than Global Net. It trades about 0.03 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.02 per unit of risk. If you would invest 2,240 in Cherry Hill Mortgage on November 8, 2024 and sell it today you would earn a total of 10.00 from holding Cherry Hill Mortgage or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. Global Net Lease
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Global Net Lease |
Cherry Hill and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Global Net
The main advantage of trading using opposite Cherry Hill and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net'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 |
| Global Net vs. Modiv Inc | Global Net vs. Precinct Properties New | Global Net vs. Global Net Lease | Global Net vs. NexPoint Diversified Real |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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