Correlation Between Ready Capital and Corebridge Financial

Can any of the company-specific risk be diversified away by investing in both Ready Capital and Corebridge Financial 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 Corebridge Financial 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 Corebridge Financial, you can compare the effects of market volatilities on Ready Capital and Corebridge Financial 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 Corebridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Corebridge Financial.

Diversification Opportunities for Ready Capital and Corebridge Financial

-0.67

Correlation Coefficient

Ready Capital  Corebridge Financial

Excellent diversification

The 3 months correlation between Ready and Corebridge is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Corebridge Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corebridge Financial 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 Corebridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corebridge Financial has no effect on the direction of Ready Capital i.e., Ready Capital and Corebridge Financial go up and down completely randomly.

Pair Corralation between Ready Capital and Corebridge Financial

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 0.51 times more return on investment than Corebridge Financial. However, Ready Capital Corp is 1.98 times less risky than Corebridge Financial. It trades about 0.37 of its potential returns per unit of risk. Corebridge Financial is currently generating about 0.03 per unit of risk. If you would invest  671.00  in Ready Capital Corp on September 4, 2024 and sell it today you would earn a total of  86.00  from holding Ready Capital Corp or generate 12.82% return on investment over 90 days.

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

Ready Capital Corp  vs.  Corebridge Financial

Ready Capital Corp

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental indicators, Ready Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Corebridge Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corebridge Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Corebridge Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ready Capital and Corebridge Financial

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

The idea behind Ready Capital Corp and Corebridge Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.