Correlation Between Ready Capital and Xtrackers RREEF

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

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

Diversification Opportunities for Ready Capital and Xtrackers RREEF

-0.15

Correlation Coefficient

Ready Capital  Xtrackers RREEF

Good diversification

The 3 months correlation between Ready and Xtrackers is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital and Xtrackers RREEF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers RREEF Global 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 are associated (or correlated) with Xtrackers RREEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers RREEF Global has no effect on the direction of Ready Capital i.e., Ready Capital and Xtrackers RREEF go up and down completely randomly.

Pair Corralation between Ready Capital and Xtrackers RREEF

Considering the 90-day investment horizon Ready Capital is expected to under-perform the Xtrackers RREEF. But the etf apears to be less risky and, when comparing its historical volatility, Ready Capital is 2.01 times less risky than Xtrackers RREEF. The etf trades about -0.13 of its potential returns per unit of risk. The Xtrackers RREEF Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,340  in Xtrackers RREEF Global on December 28, 2024 and sell it today you would earn a total of  177.94  from holding Xtrackers RREEF Global or generate 7.6% return on investment over 90 days.

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

Ready Capital  vs.  Xtrackers RREEF Global

Ready Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ready Capital 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.

Xtrackers RREEF Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers RREEF Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Xtrackers RREEF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ready Capital and Xtrackers RREEF

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

The idea behind Ready Capital and Xtrackers RREEF Global 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.