Correlation Between Ready Capital and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both Ready Capital and Chimera Investment 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 Ready Capital and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ready Capital and Chimera Investment, you can compare the effects of market volatilities on Ready Capital and Chimera Investment 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 Ready Capital with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Chimera Investment.
Diversification Opportunities for Ready Capital and Chimera Investment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ready and Chimera is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and Ready Capital 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 Ready Capital are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Ready Capital i.e., Ready Capital and Chimera Investment go up and down completely randomly.
Pair Corralation between Ready Capital and Chimera Investment
Assuming the 90 days horizon Ready Capital is expected to under-perform the Chimera Investment. But the preferred stock apears to be less risky and, when comparing its historical volatility, Ready Capital is 1.61 times less risky than Chimera Investment. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Chimera Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,386 in Chimera Investment on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Chimera Investment or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital vs. Chimera Investment
Performance |
| Timeline |
| Ready Capital |
| Chimera Investment |
Ready Capital and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and Chimera Investment
The main advantage of trading using opposite Ready Capital and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.| Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. ARMOUR Residential REIT | Ready Capital vs. Rithm Capital Corp | Ready Capital vs. Dynex Capital |
| Chimera Investment vs. AGNC Investment Corp | Chimera Investment vs. Annaly Capital Management | Chimera Investment vs. AGNC Investment Corp | Chimera Investment vs. New York Mortgage |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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