Correlation Between Rithm Capital and 03027XBV1

Can any of the company-specific risk be diversified away by investing in both Rithm Capital and 03027XBV1 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 03027XBV1 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 AMT 365 15 MAR 27, you can compare the effects of market volatilities on Rithm Capital and 03027XBV1 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 03027XBV1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and 03027XBV1.

Diversification Opportunities for Rithm Capital and 03027XBV1

0.15

Correlation Coefficient

Rithm Capital  03027XBV1

Average diversification

The 3 months correlation between Rithm and 03027XBV1 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and AMT 365 15 MAR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMT 365 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 03027XBV1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMT 365 15 has no effect on the direction of Rithm Capital i.e., Rithm Capital and 03027XBV1 go up and down completely randomly.

Pair Corralation between Rithm Capital and 03027XBV1

Assuming the 90 days trading horizon Rithm Capital Corp is expected to generate 0.82 times more return on investment than 03027XBV1. However, Rithm Capital Corp is 1.22 times less risky than 03027XBV1. It trades about 0.21 of its potential returns per unit of risk. AMT 365 15 MAR 27 is currently generating about -0.08 per unit of risk. If you would invest  2,425  in Rithm Capital Corp on December 25, 2024 and sell it today you would earn a total of  75.00  from holding Rithm Capital Corp or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Rithm Capital Corp  vs.  AMT 365 15 MAR 27

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.

AMT 365 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMT 365 15 MAR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 03027XBV1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rithm Capital and 03027XBV1

The main advantage of trading using opposite Rithm Capital and 03027XBV1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Capital position performs unexpectedly, 03027XBV1 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 03027XBV1 will offset losses from the drop in 03027XBV1's long position.

The idea behind Rithm Capital Corp and AMT 365 15 MAR 27 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.