Correlation Between Ready Capital and Piedmont Office

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

Diversification Opportunities for Ready Capital and Piedmont Office

-0.35

Correlation Coefficient

Ready Capital  Piedmont Office

Very good diversification

The 3 months correlation between Ready and Piedmont is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty 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 Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of Ready Capital i.e., Ready Capital and Piedmont Office go up and down completely randomly.

Pair Corralation between Ready Capital and Piedmont Office

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to under-perform the Piedmont Office. In addition to that, Ready Capital is 1.01 times more volatile than Piedmont Office Realty. It trades about -0.07 of its total potential returns per unit of risk. Piedmont Office Realty is currently generating about 0.01 per unit of volatility. If you would invest  963.00  in Piedmont Office Realty on August 30, 2024 and sell it today you would earn a total of  5.00  from holding Piedmont Office Realty or generate 0.52% return on investment over 90 days.

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

Ready Capital Corp  vs.  Piedmont Office Realty

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 latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Piedmont Office Realty

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Piedmont Office Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Piedmont Office is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ready Capital and Piedmont Office

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

The idea behind Ready Capital Corp and Piedmont Office Realty 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 CEOs Directory module to screen CEOs from public companies around the world.