Correlation Between Chimera Investment and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and Cherry Hill 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 Chimera Investment and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and Cherry Hill Mortgage, you can compare the effects of market volatilities on Chimera Investment and Cherry Hill 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 Chimera Investment with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Cherry Hill.
Diversification Opportunities for Chimera Investment and Cherry Hill
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chimera and Cherry is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Cherry Hill Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cherry Hill Mortgage and Chimera Investment 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 Chimera Investment are associated (or correlated) with Cherry Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cherry Hill Mortgage has no effect on the direction of Chimera Investment i.e., Chimera Investment and Cherry Hill go up and down completely randomly.
Pair Corralation between Chimera Investment and Cherry Hill
Assuming the 90 days trading horizon Chimera Investment is expected to generate 1.9 times less return on investment than Cherry Hill. But when comparing it to its historical volatility, Chimera Investment is 1.18 times less risky than Cherry Hill. It trades about 0.1 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,424 in Cherry Hill Mortgage on November 18, 2024 and sell it today you would earn a total of 30.00 from holding Cherry Hill Mortgage or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Chimera Investment |
| Cherry Hill Mortgage |
Chimera Investment and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Cherry Hill
The main advantage of trading using opposite Chimera Investment and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, Cherry Hill 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 Cherry Hill will offset losses from the drop in Cherry Hill's long position.| Chimera Investment vs. Chimera Investment | Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Chimera Investment |
| Cherry Hill vs. Chimera Investment | Cherry Hill vs. AG Mortgage Investment | Cherry Hill vs. PennyMac Mortgage Investment | Cherry Hill vs. Lument Finance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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