Correlation Between Arbor Realty and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Arbor Realty and Rithm Capital 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 Arbor Realty and Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Realty Trust and Rithm Capital Corp, you can compare the effects of market volatilities on Arbor Realty and Rithm Capital 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 Arbor Realty with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Rithm Capital.
Diversification Opportunities for Arbor Realty and Rithm Capital
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arbor and Rithm is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Arbor Realty i.e., Arbor Realty and Rithm Capital go up and down completely randomly.
Pair Corralation between Arbor Realty and Rithm Capital
Assuming the 90 days trading horizon Arbor Realty Trust is expected to under-perform the Rithm Capital. In addition to that, Arbor Realty is 4.42 times more volatile than Rithm Capital Corp. It trades about -0.06 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.32 per unit of volatility. If you would invest 2,548 in Rithm Capital Corp on November 1, 2024 and sell it today you would earn a total of 38.00 from holding Rithm Capital Corp or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Realty Trust vs. Rithm Capital Corp
Performance |
| Timeline |
| Arbor Realty Trust |
| Rithm Capital Corp |
Arbor Realty and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and Rithm Capital
The main advantage of trading using opposite Arbor Realty and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty position performs unexpectedly, Rithm Capital 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 Rithm Capital will offset losses from the drop in Rithm Capital's long position.| Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. ACRES Commercial Realty | Arbor Realty vs. PennyMac Mortgage Investment |
| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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