Correlation Between Sachem Capital and Modiv

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

Diversification Opportunities for Sachem Capital and Modiv

0.33

Correlation Coefficient

Sachem Capital  Modiv

Weak diversification

The 3 months correlation between Sachem and Modiv is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Sachem Capital i.e., Sachem Capital and Modiv go up and down completely randomly.

Pair Corralation between Sachem Capital and Modiv

Assuming the 90 days trading horizon Sachem Capital Corp is expected to under-perform the Modiv. In addition to that, Sachem Capital is 4.66 times more volatile than Modiv Inc. It trades about -0.12 of its total potential returns per unit of risk. Modiv Inc is currently generating about -0.01 per unit of volatility. If you would invest  2,378  in Modiv Inc on November 29, 2024 and sell it today you would lose (17.00) from holding Modiv Inc or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Sachem Capital Corp  vs.  Modiv Inc

Sachem Capital Corp

Risk-Adjusted Performance

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

Modiv Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sachem Capital and Modiv

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

The idea behind Sachem Capital Corp and Modiv Inc 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.