Correlation Between Sachem Capital and ACRES Commercial

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

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

Diversification Opportunities for Sachem Capital and ACRES Commercial

-0.59

Correlation Coefficient

Sachem Capital  ACRES Commercial

Excellent diversification

The 3 months correlation between Sachem and ACRES is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp 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 Sachem Capital 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 Sachem Capital Corp 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 Sachem Capital i.e., Sachem Capital and ACRES Commercial go up and down completely randomly.

Pair Corralation between Sachem Capital and ACRES Commercial

Assuming the 90 days trading horizon Sachem Capital is expected to generate 4.74 times less return on investment than ACRES Commercial. In addition to that, Sachem Capital is 1.74 times more volatile than ACRES Commercial Realty. It trades about 0.01 of its total potential returns per unit of risk. ACRES Commercial Realty is currently generating about 0.09 per unit of volatility. If you would invest  1,720  in ACRES Commercial Realty on September 26, 2024 and sell it today you would earn a total of  795.00  from holding ACRES Commercial Realty or generate 46.22% return on investment over 90 days.

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

Sachem Capital Corp  vs.  ACRES Commercial Realty

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 unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ACRES Commercial Realty

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACRES Commercial Realty are ranked lower than 14 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sachem Capital and ACRES Commercial

The main advantage of trading using opposite Sachem Capital and ACRES Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sachem Capital 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 Sachem Capital Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.