Correlation Between Granite Point and Sachem Capital

Can any of the company-specific risk be diversified away by investing in both Granite Point and Sachem Capital 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 Sachem Capital 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 Sachem Capital Corp, you can compare the effects of market volatilities on Granite Point and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Point and Sachem Capital.

Diversification Opportunities for Granite Point and Sachem Capital

0.0

Correlation Coefficient

Granite Point  Sachem Capital

Pay attention - limited upside

The 3 months correlation between Granite and Sachem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Granite Point i.e., Granite Point and Sachem Capital go up and down completely randomly.

Pair Corralation between Granite Point and Sachem Capital

Assuming the 90 days trading horizon Granite Point Mortgage is expected to generate 0.79 times more return on investment than Sachem Capital. However, Granite Point Mortgage is 1.27 times less risky than Sachem Capital. It trades about 0.23 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about -0.06 per unit of risk. If you would invest  1,531  in Granite Point Mortgage on September 2, 2024 and sell it today you would earn a total of  282.00  from holding Granite Point Mortgage or generate 18.42% return on investment over 90 days.

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

Granite Point Mortgage  vs.  Sachem Capital Corp

Granite Point Mortgage

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Point Mortgage are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Granite Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sachem Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Granite Point and Sachem Capital

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

The idea behind Granite Point Mortgage and Sachem Capital Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..