Correlation Between Ares Commercial and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Ares Commercial and Rithm 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 Ares Commercial and Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Commercial Real and Rithm Capital Corp, you can compare the effects of market volatilities on Ares Commercial and Rithm 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 Ares Commercial with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Commercial and Rithm Capital.
Diversification Opportunities for Ares Commercial and Rithm Capital
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and Rithm is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp and Ares Commercial 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 Ares Commercial Real are associated (or correlated) with Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Ares Commercial i.e., Ares Commercial and Rithm Capital go up and down completely randomly.
Pair Corralation between Ares Commercial and Rithm Capital
Given the investment horizon of 90 days Ares Commercial Real is expected to under-perform the Rithm Capital. In addition to that, Ares Commercial is 2.32 times more volatile than Rithm Capital Corp. It trades about -0.21 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.14 per unit of volatility. If you would invest 1,090 in Rithm Capital Corp on December 3, 2024 and sell it today you would earn a total of 105.00 from holding Rithm Capital Corp or generate 9.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ares Commercial Real vs. Rithm Capital Corp
Performance |
Timeline |
Ares Commercial Real |
Rithm Capital Corp |
Ares Commercial and Rithm Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ares Commercial and Rithm Capital
The main advantage of trading using opposite Ares Commercial and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Commercial position performs unexpectedly, Rithm 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 Rithm Capital will offset losses from the drop in Rithm Capital's long position.Ares Commercial vs. Two Harbors Investments | Ares Commercial vs. Apollo Commercial Real | Ares Commercial vs. Ellington Financial | Ares Commercial vs. Dynex Capital |
Rithm Capital vs. Starwood Property Trust | Rithm Capital vs. AGNC Investment Corp | Rithm Capital vs. Blackstone Mortgage Trust | Rithm Capital vs. Ares Commercial Real |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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