Correlation Between Ready Capital and American Assets
Can any of the company-specific risk be diversified away by investing in both Ready Capital and American Assets 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 American Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ready Capital Corp and American Assets Trust, you can compare the effects of market volatilities on Ready Capital and American Assets 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 American Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and American Assets.
Diversification Opportunities for Ready Capital and American Assets
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ready and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and American Assets Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Assets Trust 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 Corp are associated (or correlated) with American Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Assets Trust has no effect on the direction of Ready Capital i.e., Ready Capital and American Assets go up and down completely randomly.
Pair Corralation between Ready Capital and American Assets
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 1.24 times more return on investment than American Assets. However, Ready Capital is 1.24 times more volatile than American Assets Trust. It trades about 0.11 of its potential returns per unit of risk. American Assets Trust is currently generating about 0.06 per unit of risk. If you would invest 696.00 in Ready Capital Corp on August 23, 2024 and sell it today you would earn a total of 29.00 from holding Ready Capital Corp or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. American Assets Trust
Performance |
| Timeline |
| Ready Capital Corp |
| American Assets Trust |
Ready Capital and American Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and American Assets
The main advantage of trading using opposite Ready Capital and American Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, American Assets 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 American Assets will offset losses from the drop in American Assets' long position.| Ready Capital vs. Ellington Residential Mortgage | Ready Capital vs. Ellington Financial | Ready Capital vs. Dynex Capital | Ready Capital vs. Orchid Island Capital |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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