Correlation Between Cherry Hill and Ladder Capital
Can any of the company-specific risk be diversified away by investing in both Cherry Hill and Ladder Capital 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 Ladder Capital 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 Ladder Capital Corp, you can compare the effects of market volatilities on Cherry Hill and Ladder Capital 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 Ladder Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cherry Hill and Ladder Capital.
Diversification Opportunities for Cherry Hill and Ladder Capital
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cherry and Ladder is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage and Ladder Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital 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 Ladder Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Corp has no effect on the direction of Cherry Hill i.e., Cherry Hill and Ladder Capital go up and down completely randomly.
Pair Corralation between Cherry Hill and Ladder Capital
Given the investment horizon of 90 days Cherry Hill Mortgage is expected to under-perform the Ladder Capital. In addition to that, Cherry Hill is 1.7 times more volatile than Ladder Capital Corp. It trades about -0.54 of its total potential returns per unit of risk. Ladder Capital Corp is currently generating about 0.23 per unit of volatility. If you would invest 1,097 in Ladder Capital Corp on August 24, 2024 and sell it today you would earn a total of 78.00 from holding Ladder Capital Corp or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cherry Hill Mortgage vs. Ladder Capital Corp
Performance |
| Timeline |
| Cherry Hill Mortgage |
| Ladder Capital Corp |
Cherry Hill and Ladder Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cherry Hill and Ladder Capital
The main advantage of trading using opposite Cherry Hill and Ladder Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill position performs unexpectedly, Ladder Capital 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 Ladder Capital will offset losses from the drop in Ladder Capital's long position.| Cherry Hill vs. Ellington Financial | Cherry Hill vs. Dynex Capital | Cherry Hill vs. Ares Commercial Real | Cherry Hill vs. Chimera Investment |
| Ladder Capital vs. KKR Real Estate | Ladder Capital vs. Ares Commercial Real | Ladder Capital vs. Ellington Residential Mortgage | Ladder Capital vs. Claros Mortgage Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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