Correlation Between Ready Capital and HG Holdings

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

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

Diversification Opportunities for Ready Capital and HG Holdings

-0.45

Correlation Coefficient

Ready Capital  HG Holdings

Very good diversification

The 3 months correlation between Ready and STLY is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital and HG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HG Holdings and Ready 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 Ready Capital are associated (or correlated) with HG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HG Holdings has no effect on the direction of Ready Capital i.e., Ready Capital and HG Holdings go up and down completely randomly.

Pair Corralation between Ready Capital and HG Holdings

If you would invest  1,827  in Ready Capital on September 17, 2024 and sell it today you would earn a total of  13.00  from holding Ready Capital or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Ready Capital  vs.  HG Holdings

Ready Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ready Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ready Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, HG Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ready Capital and HG Holdings

The main advantage of trading using opposite Ready Capital and HG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, HG Holdings 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 HG Holdings will offset losses from the drop in HG Holdings' long position.

The idea behind Ready Capital and HG Holdings 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.