Correlation Between Rithm Capital and Ready Capital
Can any of the company-specific risk be diversified away by investing in both Rithm Capital and Ready Capital 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 Rithm Capital and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rithm Capital Corp and Ready Capital Corp, you can compare the effects of market volatilities on Rithm Capital and Ready Capital 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 Rithm Capital with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Ready Capital.
Diversification Opportunities for Rithm Capital and Ready Capital
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rithm and Ready is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and Ready Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital Corp and Rithm 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 Rithm Capital Corp are associated (or correlated) with Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital Corp has no effect on the direction of Rithm Capital i.e., Rithm Capital and Ready Capital go up and down completely randomly.
Pair Corralation between Rithm Capital and Ready Capital
Assuming the 90 days trading horizon Rithm Capital is expected to generate 7.14 times less return on investment than Ready Capital. But when comparing it to its historical volatility, Rithm Capital Corp is 8.11 times less risky than Ready Capital. It trades about 0.19 of its potential returns per unit of risk. Ready Capital Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 701.00 in Ready Capital Corp on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Ready Capital Corp or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. Ready Capital Corp
Performance |
| Timeline |
| Rithm Capital Corp |
| Ready Capital Corp |
Rithm Capital and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and Ready Capital
The main advantage of trading using opposite Rithm Capital and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital's long position.| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment | Rithm Capital vs. AGNC Investment Corp |
| Ready Capital vs. Ellington Financial | Ready Capital vs. Dynex Capital | Ready Capital vs. Orchid Island Capital | Ready Capital vs. Invesco Mortgage Capital |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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