Correlation Between Franklin BSP and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Franklin BSP 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 Franklin BSP and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin BSP Realty and Cherry Hill Mortgage, you can compare the effects of market volatilities on Franklin BSP 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 Franklin BSP with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin BSP and Cherry Hill.
Diversification Opportunities for Franklin BSP and Cherry Hill
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Cherry is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin BSP Realty 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 Franklin BSP 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 Franklin BSP Realty 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 Franklin BSP i.e., Franklin BSP and Cherry Hill go up and down completely randomly.
Pair Corralation between Franklin BSP and Cherry Hill
Given the investment horizon of 90 days Franklin BSP is expected to generate 14.33 times less return on investment than Cherry Hill. But when comparing it to its historical volatility, Franklin BSP Realty is 1.8 times less risky than Cherry Hill. It trades about 0.04 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Cherry Hill Mortgage on November 4, 2024 and sell it today you would earn a total of 79.00 from holding Cherry Hill Mortgage or generate 31.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin BSP Realty vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Franklin BSP Realty |
| Cherry Hill Mortgage |
Franklin BSP and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin BSP and Cherry Hill
The main advantage of trading using opposite Franklin BSP and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin BSP 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.| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Ladder Capital Corp | Franklin BSP vs. Apollo Commercial Real |
| Cherry Hill vs. Ellington Financial | Cherry Hill vs. Dynex Capital | Cherry Hill vs. Ares Commercial Real | Cherry Hill 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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