Correlation Between Invesco Mortgage and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Invesco Mortgage 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 Invesco Mortgage and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Mortgage Capital and Cherry Hill Mortgage, you can compare the effects of market volatilities on Invesco Mortgage 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 Invesco Mortgage with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Mortgage and Cherry Hill.
Diversification Opportunities for Invesco Mortgage and Cherry Hill
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and Cherry is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Mortgage Capital 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 Invesco Mortgage 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 Invesco Mortgage Capital 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 Invesco Mortgage i.e., Invesco Mortgage and Cherry Hill go up and down completely randomly.
Pair Corralation between Invesco Mortgage and Cherry Hill
Assuming the 90 days trading horizon Invesco Mortgage Capital is expected to generate 0.68 times more return on investment than Cherry Hill. However, Invesco Mortgage Capital is 1.47 times less risky than Cherry Hill. It trades about 0.07 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.02 per unit of risk. If you would invest 2,398 in Invesco Mortgage Capital on August 30, 2024 and sell it today you would earn a total of 138.00 from holding Invesco Mortgage Capital or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Mortgage Capital vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Invesco Mortgage Capital |
| Cherry Hill Mortgage |
Invesco Mortgage and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Mortgage and Cherry Hill
The main advantage of trading using opposite Invesco Mortgage and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Mortgage 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.| Invesco Mortgage vs. New York Mortgage | Invesco Mortgage vs. New York Mortgage | Invesco Mortgage vs. Two Harbors Investment | Invesco Mortgage vs. Two Harbors Investment |
| Cherry Hill vs. Two Harbors Investment | Cherry Hill vs. Invesco Mortgage Capital | Cherry Hill vs. Chimera Investment | Cherry Hill vs. MFA Financial |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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