Correlation Between Lion Financial and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Lion Financial 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 Lion Financial and Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Financial Group and Rithm Capital Corp, you can compare the effects of market volatilities on Lion Financial 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 Lion Financial with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Financial and Rithm Capital.
Diversification Opportunities for Lion Financial and Rithm Capital
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and Rithm is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group 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 Lion Financial 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 Lion Financial Group 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 Lion Financial i.e., Lion Financial and Rithm Capital go up and down completely randomly.
Pair Corralation between Lion Financial and Rithm Capital
Assuming the 90 days horizon Lion Financial Group is expected to generate 9.72 times more return on investment than Rithm Capital. However, Lion Financial is 9.72 times more volatile than Rithm Capital Corp. It trades about 0.03 of its potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.07 per unit of risk. If you would invest 5.35 in Lion Financial Group on August 24, 2024 and sell it today you would lose (4.59) from holding Lion Financial Group or give up 85.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Lion Financial Group vs. Rithm Capital Corp
Performance |
| Timeline |
| Lion Financial Group |
| Rithm Capital Corp |
Lion Financial and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Financial and Rithm Capital
The main advantage of trading using opposite Lion Financial and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Financial 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.The idea behind Lion Financial Group and Rithm Capital Corp 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.| Rithm Capital vs. Starwood Property Trust | Rithm Capital vs. AGNC Investment Corp | Rithm Capital vs. Blackstone Mortgage Trust | Rithm Capital vs. Ares Commercial Real |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |