Correlation Between Extendicare and Cherry Hill

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

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

Diversification Opportunities for Extendicare and Cherry Hill

0.0

Correlation Coefficient

Extendicare  Cherry Hill

Pay attention - limited upside

The 3 months correlation between Extendicare and Cherry is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Extendicare 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 Extendicare 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 Extendicare 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 Extendicare i.e., Extendicare and Cherry Hill go up and down completely randomly.

Pair Corralation between Extendicare and Cherry Hill

If you would invest  2,177  in Cherry Hill Mortgage on November 29, 2024 and sell it today you would earn a total of  31.00  from holding Cherry Hill Mortgage or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Extendicare  vs.  Cherry Hill Mortgage

Extendicare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Extendicare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Extendicare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Extendicare and Cherry Hill

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

The idea behind Extendicare and Cherry Hill Mortgage 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.