Correlation Between Chimera Investment and Ready Capital
Can any of the company-specific risk be diversified away by investing in both Chimera Investment and Ready 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 Chimera Investment and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chimera Investment and Ready Capital, you can compare the effects of market volatilities on Chimera Investment and Ready 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 Chimera Investment with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Ready Capital.
Diversification Opportunities for Chimera Investment and Ready Capital
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chimera and Ready is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and Chimera Investment 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 Chimera Investment are associated (or correlated) with Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of Chimera Investment i.e., Chimera Investment and Ready Capital go up and down completely randomly.
Pair Corralation between Chimera Investment and Ready Capital
Assuming the 90 days trading horizon Chimera Investment is expected to generate 1.12 times more return on investment than Ready Capital. However, Chimera Investment is 1.12 times more volatile than Ready Capital. It trades about 0.08 of its potential returns per unit of risk. Ready Capital is currently generating about 0.02 per unit of risk. If you would invest 1,827 in Chimera Investment on November 9, 2024 and sell it today you would earn a total of 691.00 from holding Chimera Investment or generate 37.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. Ready Capital
Performance |
| Timeline |
| Chimera Investment |
| Ready Capital |
Chimera Investment and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Ready Capital
The main advantage of trading using opposite Chimera Investment and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment position performs unexpectedly, Ready 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 Ready Capital will offset losses from the drop in Ready Capital's long position.| Chimera Investment vs. MFA Financial | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Invesco Mortgage Capital | Chimera Investment vs. Chimera Investment |
| Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. ARMOUR Residential REIT | Ready Capital vs. Rithm Capital Corp | Ready Capital vs. Dynex Capital |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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