Correlation Between Cherry Hill and ACRES Commercial

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

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

Diversification Opportunities for Cherry Hill and ACRES Commercial

0.06

Correlation Coefficient

Cherry Hill  ACRES Commercial

Significant diversification

The 3 months correlation between Cherry and ACRES is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cherry Hill Mortgage 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 Cherry Hill 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 Cherry Hill Mortgage 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 Cherry Hill i.e., Cherry Hill and ACRES Commercial go up and down completely randomly.

Pair Corralation between Cherry Hill and ACRES Commercial

Assuming the 90 days trading horizon Cherry Hill is expected to generate 1.42 times less return on investment than ACRES Commercial. In addition to that, Cherry Hill is 4.33 times more volatile than ACRES Commercial Realty. It trades about 0.03 of its total potential returns per unit of risk. ACRES Commercial Realty is currently generating about 0.17 per unit of volatility. If you would invest  2,449  in ACRES Commercial Realty on November 29, 2024 and sell it today you would earn a total of  61.00  from holding ACRES Commercial Realty or generate 2.49% return on investment over 90 days.

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

Cherry Hill Mortgage  vs.  ACRES Commercial Realty

Cherry Hill Mortgage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cherry Hill Mortgage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cherry Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ACRES Commercial Realty

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACRES Commercial Realty are ranked lower than 13 (%) 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.

Pair Trading with Cherry Hill and ACRES Commercial

The main advantage of trading using opposite Cherry Hill and ACRES Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cherry Hill 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.

The idea behind Cherry Hill Mortgage and ACRES Commercial Realty 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.