Correlation Between Cherry Hill and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and Chimera Investment 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 Chimera Investment 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 Chimera Investment, you can compare the effects of market volatilities on Cherry Hill and Chimera Investment 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 Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Chimera Investment.
Diversification Opportunities for Cherry Hill and Chimera Investment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cherry and Chimera is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment 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 Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Cherry Hill i.e., Cherry Hill and Chimera Investment go up and down completely randomly.
Pair Corralation between Cherry Hill and Chimera Investment
Assuming the 90 days trading horizon Cherry Hill is expected to generate 1.16 times less return on investment than Chimera Investment. But when comparing it to its historical volatility, Cherry Hill Mortgage is 1.42 times less risky than Chimera Investment. It trades about 0.08 of its potential returns per unit of risk. Chimera Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,656 in Chimera Investment on August 27, 2024 and sell it today you would earn a total of 704.00 from holding Chimera Investment or generate 42.51% 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. Chimera Investment
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Chimera Investment |
Cherry Hill and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Chimera Investment
The main advantage of trading using opposite Cherry Hill and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.| Cherry Hill vs. Annaly Capital Management | Cherry Hill vs. AGNC Investment Corp | Cherry Hill vs. Invesco Mortgage Capital | Cherry Hill vs. Invesco Mortgage Capital |
| Chimera Investment vs. Chimera Investment | Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Chimera 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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