Correlation Between Cherry Hill and TPG RE
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and TPG RE 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 TPG RE 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 TPG RE Finance, you can compare the effects of market volatilities on Cherry Hill and TPG RE 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 TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and TPG RE.
Diversification Opportunities for Cherry Hill and TPG RE
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cherry and TPG is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance 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 TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of Cherry Hill i.e., Cherry Hill and TPG RE go up and down completely randomly.
Pair Corralation between Cherry Hill and TPG RE
Assuming the 90 days trading horizon Cherry Hill is expected to generate 2.6 times less return on investment than TPG RE. But when comparing it to its historical volatility, Cherry Hill Mortgage is 1.35 times less risky than TPG RE. It trades about 0.07 of its potential returns per unit of risk. TPG RE Finance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,274 in TPG RE Finance on August 27, 2024 and sell it today you would earn a total of 636.00 from holding TPG RE Finance or generate 49.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. TPG RE Finance
Performance |
| Timeline |
| Cherry Hill Mortgage |
| TPG RE Finance |
Cherry Hill and TPG RE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and TPG RE
The main advantage of trading using opposite Cherry Hill and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE's long position.| Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Chimera Investment | Cherry Hill 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |