Correlation Between Chimera Investment and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Chimera Investment 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 Chimera Investment and Rithm 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 Rithm Capital Corp, you can compare the effects of market volatilities on Chimera Investment 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 Chimera Investment with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and Rithm Capital.
Diversification Opportunities for Chimera Investment and Rithm Capital
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chimera and Rithm is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment 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 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 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 Chimera Investment i.e., Chimera Investment and Rithm Capital go up and down completely randomly.
Pair Corralation between Chimera Investment and Rithm Capital
Assuming the 90 days trading horizon Chimera Investment is expected to generate 3.81 times less return on investment than Rithm Capital. In addition to that, Chimera Investment is 1.79 times more volatile than Rithm Capital Corp. It trades about 0.01 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.08 per unit of volatility. If you would invest 2,523 in Rithm Capital Corp on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Rithm Capital Corp or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chimera Investment vs. Rithm Capital Corp
Performance |
| Timeline |
| Chimera Investment |
| Rithm Capital Corp |
Chimera Investment and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chimera Investment and Rithm Capital
The main advantage of trading using opposite Chimera Investment and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chimera Investment 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.| Chimera Investment vs. PennyMac Mortgage Investment | Chimera Investment vs. Two Harbors Investment | Chimera Investment vs. Chimera Investment | Chimera Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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