Correlation Between Blackstone Mortgage and Chimera Investment

Can any of the company-specific risk be diversified away by investing in both Blackstone Mortgage and Chimera Investment 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 Blackstone Mortgage and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackstone Mortgage Trust and Chimera Investment, you can compare the effects of market volatilities on Blackstone Mortgage and Chimera Investment 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 Blackstone Mortgage with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone Mortgage and Chimera Investment.

Diversification Opportunities for Blackstone Mortgage and Chimera Investment

0.51

Correlation Coefficient

Blackstone Mortgage  Chimera Investment

Very weak diversification

The 3 months correlation between Blackstone and Chimera is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Mortgage Trust and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and Blackstone Mortgage 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 Blackstone Mortgage Trust are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Blackstone Mortgage i.e., Blackstone Mortgage and Chimera Investment go up and down completely randomly.

Pair Corralation between Blackstone Mortgage and Chimera Investment

Given the investment horizon of 90 days Blackstone Mortgage Trust is expected to generate 1.04 times more return on investment than Chimera Investment. However, Blackstone Mortgage is 1.04 times more volatile than Chimera Investment. It trades about 0.08 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.01 per unit of risk. If you would invest  1,792  in Blackstone Mortgage Trust on September 1, 2024 and sell it today you would earn a total of  130.00  from holding Blackstone Mortgage Trust or generate 7.25% return on investment over 90 days.

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

Blackstone Mortgage Trust  vs.  Chimera Investment

Blackstone Mortgage Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Blackstone Mortgage may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Chimera Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Blackstone Mortgage and Chimera Investment

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

The idea behind Blackstone Mortgage Trust and Chimera Investment 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.