Correlation Between Ready Capital and RF Acquisition
Can any of the company-specific risk be diversified away by investing in both Ready Capital and RF Acquisition 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 RF Acquisition 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 RF Acquisition Corp, you can compare the effects of market volatilities on Ready Capital and RF Acquisition 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 RF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and RF Acquisition.
Diversification Opportunities for Ready Capital and RF Acquisition
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ready and RFAC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition Corp 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of Ready Capital i.e., Ready Capital and RF Acquisition go up and down completely randomly.
Pair Corralation between Ready Capital and RF Acquisition
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the RF Acquisition. In addition to that, Ready Capital is 9.93 times more volatile than RF Acquisition Corp. It trades about -0.02 of its total potential returns per unit of risk. RF Acquisition Corp is currently generating about 0.14 per unit of volatility. If you would invest 999.00 in RF Acquisition Corp on September 2, 2024 and sell it today you would earn a total of 147.00 from holding RF Acquisition Corp or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. RF Acquisition Corp
Performance |
| Timeline |
| Ready Capital Corp |
| RF Acquisition Corp |
Ready Capital and RF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and RF Acquisition
The main advantage of trading using opposite Ready Capital and RF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, RF Acquisition 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 RF Acquisition will offset losses from the drop in RF Acquisition'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 |
| RF Acquisition vs. Visa Class A | RF Acquisition vs. Diamond Hill Investment | RF Acquisition vs. Distoken Acquisition | RF Acquisition vs. Associated Capital Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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