Correlation Between Ready Capital and Global Net

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

Diversification Opportunities for Ready Capital and Global Net

0.03

Correlation Coefficient

Ready Capital  Global Net

Significant diversification

The 3 months correlation between Ready and Global is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Ready Capital i.e., Ready Capital and Global Net go up and down completely randomly.

Pair Corralation between Ready Capital and Global Net

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 1.24 times more return on investment than Global Net. However, Ready Capital is 1.24 times more volatile than Global Net Lease. It trades about -0.03 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.03 per unit of risk. If you would invest  710.00  in Ready Capital Corp on November 28, 2024 and sell it today you would lose (27.00) from holding Ready Capital Corp or give up 3.8% of portfolio value over 90 days.

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

Ready Capital Corp  vs.  Global Net Lease

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 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.

Global Net Lease

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ready Capital and Global Net

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

The idea behind Ready Capital Corp and Global Net Lease 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.