Correlation Between TPG RE and Cherry Hill
Can any of the company-specific risk be diversified away by investing in both TPG RE 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 TPG RE and Cherry Hill 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 Cherry Hill Mortgage, you can compare the effects of market volatilities on TPG RE 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 TPG RE with a short position of Cherry Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG RE and Cherry Hill.
Diversification Opportunities for TPG RE and Cherry Hill
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TPG and Cherry is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding TPG RE Finance 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 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 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 TPG RE i.e., TPG RE and Cherry Hill go up and down completely randomly.
Pair Corralation between TPG RE and Cherry Hill
Assuming the 90 days trading horizon TPG RE Finance is expected to generate 2.68 times more return on investment than Cherry Hill. However, TPG RE is 2.68 times more volatile than Cherry Hill Mortgage. It trades about 0.11 of its potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.04 per unit of risk. If you would invest 1,647 in TPG RE Finance on August 24, 2024 and sell it today you would earn a total of 273.00 from holding TPG RE Finance or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG RE Finance vs. Cherry Hill Mortgage
Performance |
| Timeline |
| TPG RE Finance |
| Cherry Hill Mortgage |
TPG RE and Cherry Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG RE and Cherry Hill
The main advantage of trading using opposite TPG RE and Cherry Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG RE 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.| TPG RE vs. ACRES Commercial Realty | TPG RE vs. Arbor Realty Trust | TPG RE vs. Aquagold International | TPG RE vs. Morningstar Unconstrained Allocation |
| Cherry Hill vs. ACRES Commercial Realty | Cherry Hill vs. Chimera Investment | Cherry Hill vs. Cherry Hill Mortgage |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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