Correlation Between Rithm Capital and Blackstone Mortgage

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

Diversification Opportunities for Rithm Capital and Blackstone Mortgage

0.78

Correlation Coefficient

Rithm Capital  Blackstone Mortgage

Poor diversification

The 3 months correlation between Rithm and Blackstone is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Capital Corp and Blackstone Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Mortgage Trust 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 Blackstone Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Mortgage Trust has no effect on the direction of Rithm Capital i.e., Rithm Capital and Blackstone Mortgage go up and down completely randomly.

Pair Corralation between Rithm Capital and Blackstone Mortgage

Given the investment horizon of 90 days Rithm Capital is expected to generate 2.26 times less return on investment than Blackstone Mortgage. But when comparing it to its historical volatility, Rithm Capital Corp is 1.16 times less risky than Blackstone Mortgage. It trades about 0.1 of its potential returns per unit of risk. Blackstone Mortgage Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,724  in Blackstone Mortgage Trust on December 29, 2024 and sell it today you would earn a total of  304.00  from holding Blackstone Mortgage Trust or generate 17.63% return on investment over 90 days.

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

Rithm Capital Corp  vs.  Blackstone Mortgage Trust

Rithm Capital Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rithm Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Rithm Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blackstone Mortgage Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Blackstone Mortgage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rithm Capital and Blackstone Mortgage

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

The idea behind Rithm Capital Corp and Blackstone Mortgage Trust 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..