Correlation Between Chimera Investment and Orchid Island
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and Orchid Island 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 Orchid Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and Orchid Island Capital, you can compare the effects of market volatilities on Chimera Investment and Orchid Island 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 Orchid Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Orchid Island.
Diversification Opportunities for Chimera Investment and Orchid Island
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chimera and Orchid is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Orchid Island Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchid Island Capital 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 Orchid Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchid Island Capital has no effect on the direction of Chimera Investment i.e., Chimera Investment and Orchid Island go up and down completely randomly.
Pair Corralation between Chimera Investment and Orchid Island
Considering the 90-day investment horizon Chimera Investment is expected to under-perform the Orchid Island. In addition to that, Chimera Investment is 1.25 times more volatile than Orchid Island Capital. It trades about -0.01 of its total potential returns per unit of risk. Orchid Island Capital is currently generating about 0.03 per unit of volatility. If you would invest 768.00 in Orchid Island Capital on November 2, 2024 and sell it today you would earn a total of 20.00 from holding Orchid Island Capital or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. Orchid Island Capital
Performance |
| Timeline |
| Chimera Investment |
| Orchid Island Capital |
Chimera Investment and Orchid Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Orchid Island
The main advantage of trading using opposite Chimera Investment and Orchid Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, Orchid Island 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 Orchid Island will offset losses from the drop in Orchid Island'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 |
| Orchid Island vs. AGNC Investment Corp | Orchid Island vs. Two Harbors Investments | Orchid Island vs. Invesco Mortgage Capital | Orchid Island 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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