Correlation Between Ready Capital and Baron Real

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

By analyzing existing cross correlation between Ready Capital Corp and Baron Real Estate, you can compare the effects of market volatilities on Ready Capital and Baron Real 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 Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Baron Real.

Diversification Opportunities for Ready Capital and Baron Real

0.77

Correlation Coefficient

Ready Capital  Baron Real

Poor diversification

The 3 months correlation between Ready and Baron is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate 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 Corp are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Ready Capital i.e., Ready Capital and Baron Real go up and down completely randomly.

Pair Corralation between Ready Capital and Baron Real

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the Baron Real. In addition to that, Ready Capital is 3.2 times more volatile than Baron Real Estate. It trades about -0.11 of its total potential returns per unit of risk. Baron Real Estate is currently generating about -0.06 per unit of volatility. If you would invest  4,002  in Baron Real Estate on December 27, 2024 and sell it today you would lose (202.00) from holding Baron Real Estate or give up 5.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ready Capital Corp  vs.  Baron Real Estate

Ready Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ready Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Baron Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Baron Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ready Capital and Baron Real

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

The idea behind Ready Capital Corp and Baron Real Estate 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..