Correlation Between Great Ajax and Ready Capital

Can any of the company-specific risk be diversified away by investing in both Great Ajax 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 Great Ajax and Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Ajax Corp and Ready Capital, you can compare the effects of market volatilities on Great Ajax 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 Great Ajax with a short position of Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Ajax and Ready Capital.

Diversification Opportunities for Great Ajax and Ready Capital

0.0

Correlation Coefficient

Great Ajax  Ready Capital

Pay attention - limited upside

The 3 months correlation between Great and Ready is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great Ajax Corp and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital and Great Ajax 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 Great Ajax 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 has no effect on the direction of Great Ajax i.e., Great Ajax and Ready Capital go up and down completely randomly.

Pair Corralation between Great Ajax and Ready Capital

If you would invest  2,365  in Ready Capital on August 31, 2024 and sell it today you would earn a total of  78.00  from holding Ready Capital or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Great Ajax Corp  vs.  Ready Capital

Great Ajax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Ajax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Great Ajax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ready Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ready Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Ready Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Great Ajax and Ready Capital

The main advantage of trading using opposite Great Ajax and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Ajax 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.

The idea behind Great Ajax Corp and Ready Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.