Correlation Between Ready Capital and Stepstone
Can any of the company-specific risk be diversified away by investing in both Ready Capital and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Ready Capital and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Stepstone.
Diversification Opportunities for Ready Capital and Stepstone
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ready and Stepstone is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Ready Capital i.e., Ready Capital and Stepstone go up and down completely randomly.
Pair Corralation between Ready Capital and Stepstone
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 0.66 times more return on investment than Stepstone. However, Ready Capital Corp is 1.51 times less risky than Stepstone. It trades about 0.03 of its potential returns per unit of risk. Stepstone Group is currently generating about -0.18 per unit of risk. If you would invest 679.00 in Ready Capital Corp on November 29, 2024 and sell it today you would earn a total of 4.00 from holding Ready Capital Corp or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. Stepstone Group
Performance |
| Timeline |
| Ready Capital Corp |
| Stepstone Group |
Ready Capital and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and Stepstone
The main advantage of trading using opposite Ready Capital and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone'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 |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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