Correlation Between ACRES Commercial and Chimera Investment

Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and Chimera Investment 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 ACRES Commercial and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACRES Commercial Realty and Chimera Investment, you can compare the effects of market volatilities on ACRES Commercial and Chimera Investment 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 ACRES Commercial with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Chimera Investment.

Diversification Opportunities for ACRES Commercial and Chimera Investment

0.87

Correlation Coefficient

ACRES Commercial  Chimera Investment

Very poor diversification

The 3 months correlation between ACRES and Chimera is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and Chimera Investment go up and down completely randomly.

Pair Corralation between ACRES Commercial and Chimera Investment

Assuming the 90 days trading horizon ACRES Commercial is expected to generate 1.24 times less return on investment than Chimera Investment. But when comparing it to its historical volatility, ACRES Commercial Realty is 1.39 times less risky than Chimera Investment. It trades about 0.24 of its potential returns per unit of risk. Chimera Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,408  in Chimera Investment on September 2, 2024 and sell it today you would earn a total of  112.00  from holding Chimera Investment or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

ACRES Commercial Realty  vs.  Chimera Investment

ACRES Commercial Realty

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ACRES Commercial Realty are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ACRES Commercial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chimera Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chimera Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Chimera Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ACRES Commercial and Chimera Investment

The main advantage of trading using opposite ACRES Commercial and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.

The idea behind ACRES Commercial Realty and Chimera Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.