Correlation Between Cornerstone Strategic and Orchid Island

Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Orchid Island 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 Cornerstone Strategic and Orchid Island into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cornerstone Strategic Value and Orchid Island Capital, you can compare the effects of market volatilities on Cornerstone Strategic and Orchid Island 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 Cornerstone Strategic with a short position of Orchid Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Orchid Island.

Diversification Opportunities for Cornerstone Strategic and Orchid Island

0.65

Correlation Coefficient

Cornerstone Strategic  Orchid Island

Poor diversification

The 3 months correlation between Cornerstone and Orchid is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Orchid Island Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchid Island Capital and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with Orchid Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchid Island Capital has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Orchid Island go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Orchid Island

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 0.81 times more return on investment than Orchid Island. However, Cornerstone Strategic Value is 1.23 times less risky than Orchid Island. It trades about 0.32 of its potential returns per unit of risk. Orchid Island Capital is currently generating about 0.1 per unit of risk. If you would invest  675.00  in Cornerstone Strategic Value on May 4, 2025 and sell it today you would earn a total of  128.00  from holding Cornerstone Strategic Value or generate 18.96% return on investment over 90 days.

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

Cornerstone Strategic Value  vs.  Orchid Island Capital

Cornerstone Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Orchid Island Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orchid Island Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Orchid Island may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Cornerstone Strategic and Orchid Island

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

The idea behind Cornerstone Strategic Value and Orchid Island Capital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.