Correlation Between New York and Ready Capital
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and Ready Capital, you can compare the effects of market volatilities on New York 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 New York with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Ready Capital.
Diversification Opportunities for New York and Ready Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Ready is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and New York 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 New York 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 New York i.e., New York and Ready Capital go up and down completely randomly.
Pair Corralation between New York and Ready Capital
Assuming the 90 days horizon New York Mortgage is expected to generate 1.17 times more return on investment than Ready Capital. However, New York is 1.17 times more volatile than Ready Capital. It trades about 0.11 of its potential returns per unit of risk. Ready Capital is currently generating about 0.09 per unit of risk. If you would invest 2,056 in New York Mortgage on August 30, 2024 and sell it today you would earn a total of 201.00 from holding New York Mortgage or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. Ready Capital
Performance |
| Timeline |
| New York Mortgage |
| Ready Capital |
New York and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Ready Capital
The main advantage of trading using opposite New York and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. NexPoint Real Estate | New York vs. TPG RE Finance | New York vs. New York Mortgage | New York vs. New York Mortgage |
| Ready Capital vs. ACRES Commercial Realty | Ready Capital vs. Dynex Capital | Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. AG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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