Correlation Between Granite Point and Ready Capital
Can any of the company-specific risk be diversified away by investing in both Granite Point 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 Granite Point and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Point Mortgage and Ready Capital, you can compare the effects of market volatilities on Granite Point 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 Granite Point with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Point and Ready Capital.
Diversification Opportunities for Granite Point and Ready Capital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and Ready is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Granite Point Mortgage and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and Granite Point 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 Granite Point Mortgage 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 Granite Point i.e., Granite Point and Ready Capital go up and down completely randomly.
Pair Corralation between Granite Point and Ready Capital
Assuming the 90 days trading horizon Granite Point Mortgage is expected to generate 0.56 times more return on investment than Ready Capital. However, Granite Point Mortgage is 1.8 times less risky than Ready Capital. It trades about -0.06 of its potential returns per unit of risk. Ready Capital is currently generating about -0.09 per unit of risk. If you would invest 1,748 in Granite Point Mortgage on November 9, 2024 and sell it today you would lose (9.00) from holding Granite Point Mortgage or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Point Mortgage vs. Ready Capital
Performance |
| Timeline |
| Granite Point Mortgage |
| Ready Capital |
Granite Point and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Point and Ready Capital
The main advantage of trading using opposite Granite Point and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Point 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.| Granite Point vs. PennyMac Mortgage Investment | Granite Point vs. Rithm Capital Corp | Granite Point vs. ARMOUR Residential REIT | Granite Point vs. MFA Financial |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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