Correlation Between Rithm Capital and BANORT

Can any of the company-specific risk be diversified away by investing in both Rithm Capital and BANORT 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 BANORT 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 BANORT 5875, you can compare the effects of market volatilities on Rithm Capital and BANORT 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 BANORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rithm Capital and BANORT.

Diversification Opportunities for Rithm Capital and BANORT

0.82

Correlation Coefficient

Rithm Capital  BANORT

Very poor diversification

The 3 months correlation between Rithm and BANORT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and BANORT 5875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANORT 5875 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 BANORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANORT 5875 has no effect on the direction of Rithm Capital i.e., Rithm Capital and BANORT go up and down completely randomly.

Pair Corralation between Rithm Capital and BANORT

Assuming the 90 days trading horizon Rithm Capital is expected to generate 1.35 times less return on investment than BANORT. In addition to that, Rithm Capital is 1.73 times more volatile than BANORT 5875. It trades about 0.21 of its total potential returns per unit of risk. BANORT 5875 is currently generating about 0.5 per unit of volatility. If you would invest  9,525  in BANORT 5875 on October 11, 2024 and sell it today you would earn a total of  25.00  from holding BANORT 5875 or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	19.05%
Values	Daily Returns

Rithm Capital Corp  vs.  BANORT 5875

Rithm Capital Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rithm Capital Corp are ranked lower than 12 (%) 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.

BANORT 5875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANORT 5875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BANORT 5875 investors.

Pair Trading with Rithm Capital and BANORT

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

The idea behind Rithm Capital Corp and BANORT 5875 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.