Correlation Between Ready Capital and American Express
Can any of the company-specific risk be diversified away by investing in both Ready Capital and American Express 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 Express 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 Express, you can compare the effects of market volatilities on Ready Capital and American Express 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 Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and American Express.
Diversification Opportunities for Ready Capital and American Express
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ready and American is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Ready Capital i.e., Ready Capital and American Express go up and down completely randomly.
Pair Corralation between Ready Capital and American Express
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the American Express. In addition to that, Ready Capital is 1.22 times more volatile than American Express. It trades about -0.02 of its total potential returns per unit of risk. American Express is currently generating about 0.1 per unit of volatility. If you would invest 15,318 in American Express on September 2, 2024 and sell it today you would earn a total of 15,150 from holding American Express or generate 98.9% 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 Express
Performance |
| Timeline |
| Ready Capital Corp |
| American Express |
Ready Capital and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and American Express
The main advantage of trading using opposite Ready Capital and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, American Express 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 Express will offset losses from the drop in American Express' long position.| Ready Capital vs. Ellington Residential Mortgage | Ready Capital vs. Ellington Financial | Ready Capital vs. Dynex Capital | Ready Capital vs. Orchid Island Capital |
| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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