Correlation Between Cherry Hill and MFA Financial
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and MFA Financial 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 MFA Financial 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 MFA Financial, you can compare the effects of market volatilities on Cherry Hill and MFA Financial 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 MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and MFA Financial.
Diversification Opportunities for Cherry Hill and MFA Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cherry and MFA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial 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 MFA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFA Financial has no effect on the direction of Cherry Hill i.e., Cherry Hill and MFA Financial go up and down completely randomly.
Pair Corralation between Cherry Hill and MFA Financial
Assuming the 90 days trading horizon Cherry Hill Mortgage is expected to generate 0.77 times more return on investment than MFA Financial. However, Cherry Hill Mortgage is 1.3 times less risky than MFA Financial. It trades about -0.2 of its potential returns per unit of risk. MFA Financial is currently generating about -0.21 per unit of risk. If you would invest 2,382 in Cherry Hill Mortgage on August 27, 2024 and sell it today you would lose (161.00) from holding Cherry Hill Mortgage or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. MFA Financial
Performance |
| Timeline |
| Cherry Hill Mortgage |
| MFA Financial |
Cherry Hill and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and MFA Financial
The main advantage of trading using opposite Cherry Hill and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, MFA Financial 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 MFA Financial will offset losses from the drop in MFA Financial's long position.| Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Invesco Mortgage Capital |
| MFA Financial vs. Chimera Investment | MFA Financial vs. ARMOUR Residential REIT | MFA Financial vs. Orchid Island Capital | MFA Financial vs. Invesco Mortgage Capital |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Stocks Directory Find actively traded stocks across global markets |