Correlation Between Rithm Capital and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both Rithm Capital 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 Rithm Capital and Cherry Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and Cherry Hill Mortgage, you can compare the effects of market volatilities on Rithm Capital 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 Rithm Capital with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Cherry Hill.
Diversification Opportunities for Rithm Capital and Cherry Hill
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rithm and Cherry is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp 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 Rithm Capital 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 Rithm Capital Corp 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 Rithm Capital i.e., Rithm Capital and Cherry Hill go up and down completely randomly.
Pair Corralation between Rithm Capital and Cherry Hill
Assuming the 90 days trading horizon Rithm Capital Corp is expected to generate 0.72 times more return on investment than Cherry Hill. However, Rithm Capital Corp is 1.4 times less risky than Cherry Hill. It trades about 0.09 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.03 per unit of risk. If you would invest 1,735 in Rithm Capital Corp on August 23, 2024 and sell it today you would earn a total of 794.00 from holding Rithm Capital Corp or generate 45.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. Cherry Hill Mortgage
Performance |
| Timeline |
| Rithm Capital Corp |
| Cherry Hill Mortgage |
Rithm Capital and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and Cherry Hill
The main advantage of trading using opposite Rithm Capital and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital 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.| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment |
| Cherry Hill vs. Lument Finance Trust | Cherry Hill vs. PennyMac Mortgage Investment | Cherry Hill vs. AG Mortgage Investment | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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