Correlation Between Rithm Capital and TPG RE
Can any of the company-specific risk be diversified away by investing in both Rithm Capital and TPG RE 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 TPG RE 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 TPG RE Finance, you can compare the effects of market volatilities on Rithm Capital and TPG RE 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 TPG RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and TPG RE.
Diversification Opportunities for Rithm Capital and TPG RE
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rithm and TPG is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance 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 TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of Rithm Capital i.e., Rithm Capital and TPG RE go up and down completely randomly.
Pair Corralation between Rithm Capital and TPG RE
Assuming the 90 days trading horizon Rithm Capital is expected to generate 1.28 times less return on investment than TPG RE. But when comparing it to its historical volatility, Rithm Capital Corp is 3.85 times less risky than TPG RE. It trades about 0.19 of its potential returns per unit of risk. TPG RE Finance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,508 in TPG RE Finance on November 9, 2024 and sell it today you would earn a total of 307.00 from holding TPG RE Finance or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. TPG RE Finance
Performance |
| Timeline |
| Rithm Capital Corp |
| TPG RE Finance |
Rithm Capital and TPG RE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rithm Capital and TPG RE
The main advantage of trading using opposite Rithm Capital and TPG RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, TPG RE 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 TPG RE will offset losses from the drop in TPG RE's long position.| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage Investment |
| TPG RE vs. KKR Real Estate | TPG RE vs. Ready Capital | TPG RE vs. PennyMac Mortgage Investment | TPG RE vs. ACRES Commercial Realty |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |