Correlation Between Ready Capital and SCCG
Can any of the company-specific risk be diversified away by investing in both Ready Capital and SCCG 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 SCCG 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 SCCG, you can compare the effects of market volatilities on Ready Capital and SCCG 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 SCCG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and SCCG.
Diversification Opportunities for Ready Capital and SCCG
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ready and SCCG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and SCCG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCCG 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 SCCG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCCG has no effect on the direction of Ready Capital i.e., Ready Capital and SCCG go up and down completely randomly.
Pair Corralation between Ready Capital and SCCG
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the SCCG. In addition to that, Ready Capital is 1.68 times more volatile than SCCG. It trades about -0.02 of its total potential returns per unit of risk. SCCG is currently generating about -0.03 per unit of volatility. If you would invest 2,256 in SCCG on August 31, 2024 and sell it today you would lose (95.23) from holding SCCG or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. SCCG
Performance |
| Timeline |
| Ready Capital Corp |
| SCCG |
Ready Capital and SCCG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and SCCG
The main advantage of trading using opposite Ready Capital and SCCG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, SCCG 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 SCCG will offset losses from the drop in SCCG's long position.| Ready Capital vs. Ellington Financial | Ready Capital vs. Dynex Capital | Ready Capital vs. Orchid Island Capital | Ready Capital vs. Invesco Mortgage Capital |
| SCCG vs. Sachem Capital Corp | SCCG vs. Babcock Wilcox Enterprises, | SCCG vs. B Riley Financial, | SCCG vs. B Riley Financial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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