Correlation Between Chimera Investment and Ares Commercial
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and Ares Commercial 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 Ares Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and Ares Commercial Real, you can compare the effects of market volatilities on Chimera Investment and Ares Commercial 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 Ares Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Ares Commercial.
Diversification Opportunities for Chimera Investment and Ares Commercial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chimera and Ares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Ares Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Commercial Real 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 Ares Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Commercial Real has no effect on the direction of Chimera Investment i.e., Chimera Investment and Ares Commercial go up and down completely randomly.
Pair Corralation between Chimera Investment and Ares Commercial
Considering the 90-day investment horizon Chimera Investment is expected to generate 1.05 times more return on investment than Ares Commercial. However, Chimera Investment is 1.05 times more volatile than Ares Commercial Real. It trades about 0.0 of its potential returns per unit of risk. Ares Commercial Real is currently generating about -0.01 per unit of risk. If you would invest 1,601 in Chimera Investment on August 24, 2024 and sell it today you would lose (139.00) from holding Chimera Investment or give up 8.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chimera Investment vs. Ares Commercial Real
Performance |
| Timeline |
| Chimera Investment |
| Ares Commercial Real |
Chimera Investment and Ares Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Ares Commercial
The main advantage of trading using opposite Chimera Investment and Ares Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, Ares Commercial 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 Ares Commercial will offset losses from the drop in Ares Commercial's long position.| Chimera Investment vs. Two Harbors Investments | Chimera Investment vs. MFA Financial | Chimera Investment vs. Invesco Mortgage Capital | Chimera Investment vs. Orchid Island Capital |
| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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