Correlation Between Rithm Capital and SolGold Plc

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

By analyzing existing cross correlation between Rithm Capital Corp and SolGold Plc, you can compare the effects of market volatilities on Rithm Capital and SolGold Plc 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 Rithm Capital with a short position of SolGold Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and SolGold Plc.

Diversification Opportunities for Rithm Capital and SolGold Plc

-0.03

Correlation Coefficient

Rithm Capital  SolGold Plc

Good diversification

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

Pair Corralation between Rithm Capital and SolGold Plc

Assuming the 90 days trading horizon Rithm Capital is expected to generate 6.18 times less return on investment than SolGold Plc. But when comparing it to its historical volatility, Rithm Capital Corp is 26.86 times less risky than SolGold Plc. It trades about 0.24 of its potential returns per unit of risk. SolGold Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.40  in SolGold Plc on December 20, 2024 and sell it today you would earn a total of  0.81  from holding SolGold Plc or generate 9.64% return on investment over 90 days.

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

Rithm Capital Corp  vs.  SolGold Plc

Rithm Capital Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rithm Capital Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Rithm Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SolGold Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SolGold Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SolGold Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rithm Capital and SolGold Plc

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

The idea behind Rithm Capital Corp and SolGold Plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.