Correlation Between Granite Point and ARES MREAL

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

By analyzing existing cross correlation between Granite Point Mortgage and ARES MREAL ESTDL 01, you can compare the effects of market volatilities on Granite Point and ARES MREAL 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 Granite Point with a short position of ARES MREAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Point and ARES MREAL.

Diversification Opportunities for Granite Point and ARES MREAL

0.92

Correlation Coefficient

Granite Point  ARES MREAL

Almost no diversification

The 3 months correlation between Granite and ARES is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage and ARES MREAL ESTDL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARES MREAL ESTDL and Granite Point 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 Granite Point Mortgage are associated (or correlated) with ARES MREAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARES MREAL ESTDL has no effect on the direction of Granite Point i.e., Granite Point and ARES MREAL go up and down completely randomly.

Pair Corralation between Granite Point and ARES MREAL

Assuming the 90 days horizon Granite Point Mortgage is expected to under-perform the ARES MREAL. In addition to that, Granite Point is 1.17 times more volatile than ARES MREAL ESTDL 01. It trades about -0.03 of its total potential returns per unit of risk. ARES MREAL ESTDL 01 is currently generating about 0.0 per unit of volatility. If you would invest  571.00  in ARES MREAL ESTDL 01 on October 25, 2024 and sell it today you would lose (3.00) from holding ARES MREAL ESTDL 01 or give up 0.53% of portfolio value over 90 days.

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

Granite Point Mortgage  vs.  ARES MREAL ESTDL 01

Granite Point Mortgage

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Point Mortgage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Granite Point may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ARES MREAL ESTDL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARES MREAL ESTDL 01 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ARES MREAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Granite Point and ARES MREAL

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

The idea behind Granite Point Mortgage and ARES MREAL ESTDL 01 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.