Correlation Between Sachem Capital and Ares Commercial
Can any of the company-specific risk be diversified away by investing in both Sachem Capital and Ares Commercial 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 Sachem Capital and Ares Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sachem Capital Corp and Ares Commercial Real, you can compare the effects of market volatilities on Sachem Capital and Ares Commercial 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 Sachem Capital with a short position of Ares Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Ares Commercial.
Diversification Opportunities for Sachem Capital and Ares Commercial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sachem and Ares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Ares Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Commercial Real and Sachem 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 Sachem Capital Corp are associated (or correlated) with Ares Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Commercial Real has no effect on the direction of Sachem Capital i.e., Sachem Capital and Ares Commercial go up and down completely randomly.
Pair Corralation between Sachem Capital and Ares Commercial
Given the investment horizon of 90 days Sachem Capital Corp is expected to under-perform the Ares Commercial. In addition to that, Sachem Capital is 1.79 times more volatile than Ares Commercial Real. It trades about -0.37 of its total potential returns per unit of risk. Ares Commercial Real is currently generating about 0.23 per unit of volatility. If you would invest 646.00 in Ares Commercial Real on August 28, 2024 and sell it today you would earn a total of 83.00 from holding Ares Commercial Real or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sachem Capital Corp vs. Ares Commercial Real
Performance |
| Timeline |
| Sachem Capital Corp |
| Ares Commercial Real |
Sachem Capital and Ares Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sachem Capital and Ares Commercial
The main advantage of trading using opposite Sachem Capital and Ares Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sachem Capital position performs unexpectedly, Ares Commercial 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 Ares Commercial will offset losses from the drop in Ares Commercial's long position.| Sachem Capital vs. Apollo Commercial Real | Sachem Capital vs. Ready Capital Corp | Sachem Capital vs. Ellington Residential Mortgage | Sachem Capital vs. KKR Real Estate |
| Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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