Correlation Between Ready Capital and Whitestone REIT
Can any of the company-specific risk be diversified away by investing in both Ready Capital and Whitestone REIT 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 Whitestone REIT 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 Whitestone REIT, you can compare the effects of market volatilities on Ready Capital and Whitestone REIT 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 Whitestone REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Whitestone REIT.
Diversification Opportunities for Ready Capital and Whitestone REIT
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ready and Whitestone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Whitestone REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone REIT 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 Whitestone REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitestone REIT has no effect on the direction of Ready Capital i.e., Ready Capital and Whitestone REIT go up and down completely randomly.
Pair Corralation between Ready Capital and Whitestone REIT
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 1.41 times more return on investment than Whitestone REIT. However, Ready Capital is 1.41 times more volatile than Whitestone REIT. It trades about 0.11 of its potential returns per unit of risk. Whitestone REIT is currently generating about 0.16 per unit of risk. If you would invest 696.00 in Ready Capital Corp on August 24, 2024 and sell it today you would earn a total of 29.00 from holding Ready Capital Corp or generate 4.17% 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. Whitestone REIT
Performance |
| Timeline |
| Ready Capital Corp |
| Whitestone REIT |
Ready Capital and Whitestone REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and Whitestone REIT
The main advantage of trading using opposite Ready Capital and Whitestone REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, Whitestone REIT 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 Whitestone REIT will offset losses from the drop in Whitestone REIT'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 |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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