Correlation Between Mastercard and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Mastercard 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 Mastercard and Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Rithm Capital Corp, you can compare the effects of market volatilities on Mastercard 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 Mastercard with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Rithm Capital.
Diversification Opportunities for Mastercard and Rithm Capital
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mastercard and Rithm is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard 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 Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and Rithm Capital go up and down completely randomly.
Pair Corralation between Mastercard and Rithm Capital
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.06 times less return on investment than Rithm Capital. But when comparing it to its historical volatility, Mastercard is 1.34 times less risky than Rithm Capital. It trades about 0.08 of its potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 721.00 in Rithm Capital Corp on August 27, 2024 and sell it today you would earn a total of 377.00 from holding Rithm Capital Corp or generate 52.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Rithm Capital Corp
Performance |
| Timeline |
| Mastercard |
| Rithm Capital Corp |
Mastercard and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Rithm Capital
The main advantage of trading using opposite Mastercard and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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.| Mastercard vs. American Express | Mastercard vs. Morningstar Unconstrained Allocation | Mastercard vs. Sitka Gold Corp | Mastercard vs. MSCI ACWI exAUCONSUMER |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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