Correlation Between Rithm Capital and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Rithm Capital and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Rithm Capital and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and Dow Jones.
Diversification Opportunities for Rithm Capital and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rithm and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Rithm Capital i.e., Rithm Capital and Dow Jones go up and down completely randomly.
Pair Corralation between Rithm Capital and Dow Jones
Assuming the 90 days trading horizon Rithm Capital Corp is expected to generate 0.59 times more return on investment than Dow Jones. However, Rithm Capital Corp is 1.7 times less risky than Dow Jones. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2,097 in Rithm Capital Corp on August 25, 2024 and sell it today you would earn a total of 358.00 from holding Rithm Capital Corp or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rithm Capital Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Rithm Capital and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Rithm Capital Corp
Pair trading matchups for Rithm Capital
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Rithm Capital and Dow Jones
The main advantage of trading using opposite Rithm Capital and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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