Correlation Between TPG RE and Ready Capital
Can any of the company-specific risk be diversified away by investing in both TPG RE 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 TPG RE and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG RE Finance and Ready Capital, you can compare the effects of market volatilities on TPG RE 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 TPG RE with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG RE and Ready Capital.
Diversification Opportunities for TPG RE and Ready Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TPG and Ready is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding TPG RE Finance and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and TPG RE 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 TPG RE Finance 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 has no effect on the direction of TPG RE i.e., TPG RE and Ready Capital go up and down completely randomly.
Pair Corralation between TPG RE and Ready Capital
Assuming the 90 days trading horizon TPG RE Finance is expected to generate 2.01 times more return on investment than Ready Capital. However, TPG RE is 2.01 times more volatile than Ready Capital. It trades about 0.04 of its potential returns per unit of risk. Ready Capital is currently generating about 0.04 per unit of risk. If you would invest 1,372 in TPG RE Finance on November 1, 2024 and sell it today you would earn a total of 434.00 from holding TPG RE Finance or generate 31.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG RE Finance vs. Ready Capital
Performance |
| Timeline |
| TPG RE Finance |
| Ready Capital |
TPG RE and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG RE and Ready Capital
The main advantage of trading using opposite TPG RE and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG RE 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.| TPG RE vs. Rithm Capital Corp | TPG RE vs. Rithm Capital Corp | TPG RE vs. Rithm Capital Corp | TPG RE vs. PennyMac Mortgage Investment |
| Ready Capital vs. Rithm Capital Corp | Ready Capital vs. Rithm Capital Corp | Ready Capital vs. Rithm Capital Corp | Ready Capital vs. PennyMac Mortgage Investment |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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