Correlation Between Apollo Commercial and Cherry Hill

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

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

Diversification Opportunities for Apollo Commercial and Cherry Hill

0.67

Correlation Coefficient

Apollo Commercial  Cherry Hill

Poor diversification

The 3 months correlation between Apollo and Cherry is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Commercial Real 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 Apollo Commercial 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 Apollo Commercial Real 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 Apollo Commercial i.e., Apollo Commercial and Cherry Hill go up and down completely randomly.

Pair Corralation between Apollo Commercial and Cherry Hill

Considering the 90-day investment horizon Apollo Commercial is expected to generate 1.11 times less return on investment than Cherry Hill. In addition to that, Apollo Commercial is 1.01 times more volatile than Cherry Hill Mortgage. It trades about 0.11 of its total potential returns per unit of risk. Cherry Hill Mortgage is currently generating about 0.12 per unit of volatility. If you would invest  341.00  in Cherry Hill Mortgage on May 4, 2024 and sell it today you would earn a total of  37.00  from holding Cherry Hill Mortgage or generate 10.85% return on investment over 90 days.

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

Apollo Commercial Real  vs.  Cherry Hill Mortgage

Apollo Commercial Real

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Commercial Real are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Apollo Commercial may actually be approaching a critical reversion point that can send shares even higher in September 2024.

Cherry Hill Mortgage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cherry Hill Mortgage are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady primary indicators, Cherry Hill may actually be approaching a critical reversion point that can send shares even higher in September 2024.

Pair Trading with Apollo Commercial and Cherry Hill

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