Correlation Between Granite Point and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Granite Point 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 Granite Point and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Point Mortgage and Cherry Hill Mortgage, you can compare the effects of market volatilities on Granite Point 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 Granite Point with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Point and Cherry Hill.
Diversification Opportunities for Granite Point and Cherry Hill
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and Cherry is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage 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 Granite Point 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 Granite Point Mortgage 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 Granite Point i.e., Granite Point and Cherry Hill go up and down completely randomly.
Pair Corralation between Granite Point and Cherry Hill
Given the investment horizon of 90 days Granite Point Mortgage is expected to generate 3.81 times more return on investment than Cherry Hill. However, Granite Point is 3.81 times more volatile than Cherry Hill Mortgage. It trades about 0.3 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about -0.3 per unit of risk. If you would invest 303.00 in Granite Point Mortgage on August 27, 2024 and sell it today you would earn a total of 49.00 from holding Granite Point Mortgage or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Point Mortgage vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Granite Point Mortgage |
| Cherry Hill Mortgage |
Granite Point and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Point and Cherry Hill
The main advantage of trading using opposite Granite Point and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Point 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.| Granite Point vs. MFA Financial | Granite Point vs. Angel Oak Mortgage | Granite Point vs. Two Harbors Investments | Granite Point vs. PennyMac Mortgage Investment |
| Cherry Hill vs. Annaly Capital Management | Cherry Hill vs. AGNC Investment Corp | Cherry Hill vs. Invesco Mortgage Capital | Cherry Hill vs. Invesco Mortgage 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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