Correlation Between Ready Capital and Franklin BSP
Can any of the company-specific risk be diversified away by investing in both Ready Capital and Franklin BSP 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 Franklin BSP 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 Franklin BSP Realty, you can compare the effects of market volatilities on Ready Capital and Franklin BSP 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 Franklin BSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Franklin BSP.
Diversification Opportunities for Ready Capital and Franklin BSP
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ready and Franklin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Franklin BSP Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin BSP Realty 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 Franklin BSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin BSP Realty has no effect on the direction of Ready Capital i.e., Ready Capital and Franklin BSP go up and down completely randomly.
Pair Corralation between Ready Capital and Franklin BSP
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the Franklin BSP. In addition to that, Ready Capital is 1.18 times more volatile than Franklin BSP Realty. It trades about -0.03 of its total potential returns per unit of risk. Franklin BSP Realty is currently generating about 0.04 per unit of volatility. If you would invest 1,152 in Franklin BSP Realty on August 24, 2024 and sell it today you would earn a total of 148.00 from holding Franklin BSP Realty or generate 12.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. Franklin BSP Realty
Performance |
| Timeline |
| Ready Capital Corp |
| Franklin BSP Realty |
Ready Capital and Franklin BSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and Franklin BSP
The main advantage of trading using opposite Ready Capital and Franklin BSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, Franklin BSP 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 Franklin BSP will offset losses from the drop in Franklin BSP's long position.| Ready Capital vs. Ellington Residential Mortgage | Ready Capital vs. Ellington Financial | Ready Capital vs. Dynex Capital | Ready Capital vs. Orchid Island Capital |
| Franklin BSP vs. AGNC Investment Corp | Franklin BSP vs. Nexpoint Real Estate | Franklin BSP vs. Great Ajax Corp | Franklin BSP vs. Ladder Capital Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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