Correlation Between Rithm Capital and 00108WAN0

Can any of the company-specific risk be diversified away by investing in both Rithm Capital and 00108WAN0 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 00108WAN0 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 AEP 345 15 MAY 51, you can compare the effects of market volatilities on Rithm Capital and 00108WAN0 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 00108WAN0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and 00108WAN0.

Diversification Opportunities for Rithm Capital and 00108WAN0

-0.11

Correlation Coefficient

Rithm Capital  00108WAN0

Good diversification

The 3 months correlation between Rithm and 00108WAN0 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and AEP 345 15 MAY 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP 345 15 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 00108WAN0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP 345 15 has no effect on the direction of Rithm Capital i.e., Rithm Capital and 00108WAN0 go up and down completely randomly.

Pair Corralation between Rithm Capital and 00108WAN0

Assuming the 90 days trading horizon Rithm Capital is expected to generate 4.5 times less return on investment than 00108WAN0. But when comparing it to its historical volatility, Rithm Capital Corp is 11.5 times less risky than 00108WAN0. It trades about 0.21 of its potential returns per unit of risk. AEP 345 15 MAY 51 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,868  in AEP 345 15 MAY 51 on December 25, 2024 and sell it today you would earn a total of  618.00  from holding AEP 345 15 MAY 51 or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.58%
Values	Daily Returns

Rithm Capital Corp  vs.  AEP 345 15 MAY 51

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 16 (%) 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.

AEP 345 15

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AEP 345 15 MAY 51 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 00108WAN0 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rithm Capital and 00108WAN0

The main advantage of trading using opposite Rithm Capital and 00108WAN0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, 00108WAN0 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 00108WAN0 will offset losses from the drop in 00108WAN0's long position.

The idea behind Rithm Capital Corp and AEP 345 15 MAY 51 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.