Correlation Between TPG RE and ACRES Commercial
Can any of the company-specific risk be diversified away by investing in both TPG RE and ACRES 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 TPG RE and ACRES Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG RE Finance and ACRES Commercial Realty, you can compare the effects of market volatilities on TPG RE and ACRES 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 TPG RE with a short position of ACRES Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG RE and ACRES Commercial.
Diversification Opportunities for TPG RE and ACRES Commercial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPG and ACRES is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding TPG RE Finance and ACRES Commercial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACRES Commercial Realty and TPG RE 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 TPG RE Finance are associated (or correlated) with ACRES Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACRES Commercial Realty has no effect on the direction of TPG RE i.e., TPG RE and ACRES Commercial go up and down completely randomly.
Pair Corralation between TPG RE and ACRES Commercial
Assuming the 90 days trading horizon TPG RE is expected to generate 1.04 times less return on investment than ACRES Commercial. In addition to that, TPG RE is 1.18 times more volatile than ACRES Commercial Realty. It trades about 0.05 of its total potential returns per unit of risk. ACRES Commercial Realty is currently generating about 0.06 per unit of volatility. If you would invest 1,551 in ACRES Commercial Realty on September 4, 2024 and sell it today you would earn a total of 724.00 from holding ACRES Commercial Realty or generate 46.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG RE Finance vs. ACRES Commercial Realty
Performance |
| Timeline |
| TPG RE Finance |
| ACRES Commercial Realty |
TPG RE and ACRES Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG RE and ACRES Commercial
The main advantage of trading using opposite TPG RE and ACRES Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG RE position performs unexpectedly, ACRES 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 ACRES Commercial will offset losses from the drop in ACRES Commercial's long position.| TPG RE vs. ACRES Commercial Realty | TPG RE vs. Dynex Capital | TPG RE vs. PennyMac Mortgage Investment | TPG RE vs. AG Mortgage Investment |
| ACRES Commercial vs. ACRES Commercial Realty | ACRES Commercial vs. Dynex Capital | ACRES Commercial vs. PennyMac Mortgage Investment | ACRES Commercial vs. AG Mortgage 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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