Correlation Between Ready Capital and 360 Finance
Can any of the company-specific risk be diversified away by investing in both Ready Capital and 360 Finance 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 360 Finance 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 360 Finance, you can compare the effects of market volatilities on Ready Capital and 360 Finance 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 360 Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and 360 Finance.
Diversification Opportunities for Ready Capital and 360 Finance
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ready and 360 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and 360 Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 Finance 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 360 Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 Finance has no effect on the direction of Ready Capital i.e., Ready Capital and 360 Finance go up and down completely randomly.
Pair Corralation between Ready Capital and 360 Finance
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the 360 Finance. But the stock apears to be less risky and, when comparing its historical volatility, Ready Capital Corp is 2.0 times less risky than 360 Finance. The stock trades about -0.06 of its potential returns per unit of risk. The 360 Finance is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,505 in 360 Finance on September 2, 2024 and sell it today you would earn a total of 1,306 from holding 360 Finance or generate 52.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. 360 Finance
Performance |
| Timeline |
| Ready Capital Corp |
| 360 Finance |
Ready Capital and 360 Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and 360 Finance
The main advantage of trading using opposite Ready Capital and 360 Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, 360 Finance 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 360 Finance will offset losses from the drop in 360 Finance'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 |
| 360 Finance vs. Victorias Secret Co | 360 Finance vs. RCS MediaGroup SpA | 360 Finance vs. PVH Corp | 360 Finance vs. Citi Trends |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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