Correlation Between Ready Capital and MarketAxess Holdings

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

Diversification Opportunities for Ready Capital and MarketAxess Holdings

0.14

Correlation Coefficient

Ready Capital  MarketAxess Holdings

Average diversification

The 3 months correlation between Ready and MarketAxess is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and MarketAxess Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarketAxess 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 Corp are associated (or correlated) with MarketAxess Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarketAxess Holdings has no effect on the direction of Ready Capital i.e., Ready Capital and MarketAxess Holdings go up and down completely randomly.

Pair Corralation between Ready Capital and MarketAxess Holdings

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the MarketAxess Holdings. In addition to that, Ready Capital is 2.17 times more volatile than MarketAxess Holdings. It trades about -0.1 of its total potential returns per unit of risk. MarketAxess Holdings is currently generating about -0.01 per unit of volatility. If you would invest  22,442  in MarketAxess Holdings on December 29, 2024 and sell it today you would lose (541.00) from holding MarketAxess Holdings or give up 2.41% 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.  MarketAxess Holdings

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.

MarketAxess Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ready Capital and MarketAxess Holdings

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

The idea behind Ready Capital Corp and MarketAxess 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.