Correlation Between Cherry Hill and Great Ajax
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and Great Ajax 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 Great Ajax 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 Great Ajax Corp, you can compare the effects of market volatilities on Cherry Hill and Great Ajax 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 Great Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Great Ajax.
Diversification Opportunities for Cherry Hill and Great Ajax
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cherry and Great is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp 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 Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Cherry Hill i.e., Cherry Hill and Great Ajax go up and down completely randomly.
Pair Corralation between Cherry Hill and Great Ajax
Given the investment horizon of 90 days Cherry Hill Mortgage is expected to under-perform the Great Ajax. In addition to that, Cherry Hill is 2.27 times more volatile than Great Ajax Corp. It trades about -0.37 of its total potential returns per unit of risk. Great Ajax Corp is currently generating about -0.17 per unit of volatility. If you would invest 315.00 in Great Ajax Corp on August 27, 2024 and sell it today you would lose (14.00) from holding Great Ajax Corp or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. Great Ajax Corp
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Great Ajax Corp |
Cherry Hill and Great Ajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Great Ajax
The main advantage of trading using opposite Cherry Hill and Great Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, Great Ajax 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 Great Ajax will offset losses from the drop in Great Ajax's long position.| Cherry Hill vs. Ellington Financial | Cherry Hill vs. Dynex Capital | Cherry Hill vs. Ares Commercial Real | Cherry Hill vs. Chimera Investment |
| Great Ajax vs. Ellington Financial | Great Ajax vs. Dynex Capital | Great Ajax vs. Ares Commercial Real | Great Ajax vs. Cherry Hill Mortgage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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